1. business and industrial
2. company
3. annual report

工 蓋 有 限 公 司*
股 份 代 號 : 1421
Kingbo Strike Limited 工 蓋 有 限 公 司 *
（於開曼群島註冊成立的有限公司）
Kingbo Strike Limited
Annual Report
2013/2014 年報
* 僅供識別
(Incorporated in the Cayman Islands with limited liability)
Stock Code: 1421
Contents
Corporate Information
Chairman’s Statement
Management Discussion and Analysis
Report of the Directors
Biography of the Directors and Senior Management
Corporate Governance Report
Independent Auditors’ Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Statement of Financial Position
Notes to Financial Statements
Four Year Financial Summary
02
04
05
09
16
18
24
26
27
28
29
31
32
76
Corporate Information
Company Name
Kingbo Strike Limited
Registered Office
Codan Trust Company (Cayman) Limited
Cricket Square, Hutchins Drive
PO Box 2681
Grand Cayman KY1-1111
Cayman Islands
Headquarter and Principal Place of Business
22 Tagore Lane
Singapore 787480
Principal Place of Business in Hong Kong
19th Floor, Prosperity Tower
39 Queen’s Road Central
Central
Hong Kong
Website of the Company
Telephone
Fax
Enquiry Email
www.kingbostrike.com
(65) 6455 3922
(65) 6455 7322
[email protected]
Financial Year End
30 June
Board of Directors
Executive Directors
Mr Yeo Jiew Yew (Managing director)
Mr Sim Yew Heng
Independent Non-Executive Directors
Mr Ng Tiow Swee (Chairman)
Ms Wong Siew Chuan
Mr Chen Jianyuan, Edwin
02
Company Secretary
Mr Li Chi Chung, Solicitor, Hong Kong
19th Floor, Prosperity Tower
39 Queen’s Road Central
Central
Hong Kong
Authorised representatives
Mr Li Chi Chung, Solicitor, Hong Kong
Mr Yeo Jiew Yew
Audit Committee
Ms Wong Siew Chuan (Chairman)
Mr Ng Tiow Swee
Mr Chen Jianyuan, Edwin
Remuneration Committee
Mr Ng Tiow Swee (Chairman)
Mr Chen Jianyuan, Edwin
Mr Yeo Jiew Yew
Kingbo Strike Limited Annual Report 2013/2014
Corporate Information
(Continued)
Nomination Committee
Mr Ng Tiow Swee (Chairman)
Ms Wong Siew Chuan
Mr Yeo Jiew Yew
Principal Share Registrar and Transfer Office
in the Cayman Islands
Codan Trust Company (Cayman) Limited
Cricket Square, Hutchins Drive
PO Box 2681
Grand Cayman KY1-1111
Cayman Islands
Branch Share Registrar and Transfer Office
in Hong Kong
Union Registrars Limited
18th Floor, Fook Lee Commercial Centre
Town Place, 33 Lockhart Road
Wanchai
Hong Kong
Compliance Adviser
Grand Vinco Capital Limited
Units 4909–4910
49th Floor, The Center
99 Queen’s Road Central
Hong Kong
Auditors
Ernst & Young
Certified Public Accountants
22/F, CITIC Tower
1 Tim Mei Avenue
Central
Hong Kong
Principal Banker
Standard Chartered Bank (Hong Kong) Limited
Standard Chartered Bank (Singapore) Limited
Place of Ordinary Share Listing
Stock Code
Board lot size
Main Board of The Stock Exchange of
Hong Kong Limited
1421
5,000 shares
Listing Date
30 December 2013
Kingbo Strike Limited Annual Report 2013/2014
03
Chairman’s Statement
Kingbo Strike Limited (the “Company”) was successfully listed on the Main Board of The Stock Exchange of
Hong Kong Limited (“Stock Exchange“) on 30 December 2013 (the “Listing”). At HK$0.50 per share, the offering
of 160 million shares garnered strong interest from the market. The successful Listing attested to shareholders’
confidence in the Group’s fundamental, business models and strategies.
On behalf of the board (the “Board”) of directors (“Directors”) of the Company and its subsidiary (collectively,
the “Group”), I am pleased to present to you the annual report and the audited financial statements of the
Group for the year ended 30 June 2014.
RESULTS
The Group posted a turnover of approximately S$22.6 million for the year ended 30 June 2014 as compared
to approximately S$18.7 million reported for the year ended 30 June 2013, an increase of approximately 20.9%
or approximately S$3.9 million. The increase is mainly attributed to favourable construction progress of our
projects.
Gross profit margin achieved for the year ended 30 June 2014 was approximately 40.3%, which was marginally
deviated from approximately 44.4% recorded for the year ended 30 June 2013, the decrease is mainly
contributed by higher revenue recorded from those lower valued-added projects.
Expenses increased by approximately S$1.7 million to approximately S$3.1 million for the year ended 30 June
2014, up from approximately S$1.4 million for the year ended 30 June 2013 which was mainly due to one-time
approximately S$1.1 million Listing expenses incurred for the year ended 30 June 2014. The Group reported a
lower net profit after tax of approximately S$5.7 million for the year ended 30 June 2014 as compared to
approximately S$6.5 million reported for the year ended 30 June 2013.
The Group has a total outstanding project pipeline amounting to approximately S$41 million as at 30 June
2014.
OUTLOOK
The Ministry of Trade and Industry of Singapore announced that the Singapore economy is expected to grow
by 2.5% to 3.5% in 2014. However, property market sentiments will remain cautious as various cooling measures
and lending curbs introduced in 2013 are unlikely to be reviewed or revised in near terms. These negative
sentiments might have significant impacts on construction sector in Singapore eventually. The growth in the
construction sector, moderated from 6.4% in Q1 2014 to 4.4 % in Q2 2014 as compared to 5.9% in year
2013. Regarding the public housing sector, in which the Group is dependent on, Housing and Development
Board of Singapore (“HDB”) has announced a sustainable BTO (built-to-order) housing programme with sales
of 9,707 units of BTO flats in first half 2014 and 12,700 units planned for second half, bringing 2014 full year
target to 22,407 units. This is 10.9% lower than the total of 25,139 units sold for year 2013.
The Group is cautiously optimistic for the next 12 months as it should be continuously benefited from HDB’s
sustainable public BTO housing programme. The Board and management of the Company will continue exploring
opportunities for growth to enhance value for its shareholders.
APPRECIATION
On behalf of the Board, I would like to extend our gratitude and sincere appreciation to all management and
staff members of the Group for their hard work and dedication and all shareholders of the Company for their
continued support.
On behalf of the Board
Kingbo Strike Limited
Ng Tiow Swee
Chairman
04
Kingbo Strike Limited Annual Report 2013/2014
Management Discussion and Analysis
BUSINESS REVIEW
The contract works undertaken by the Group are mainly electrical engineering works for public residential projects
in Singapore. For the year ended 30 June 2014, the public residential housing in Singapore has been well
supported by the Singapore Government addressing the increase in demand of public housing units due to
change in population policy. As a result, the Group has been overall benefited. The Group is cautiously optimistic
for the growth in the next 12 months.
As at 30 June 2014, the Group had completed a HDB industrial project. There are a total of 11 on-going
projects for the Group. All are public residential projects and out of which 4 are newly secured during the year
ended 30 June 2014 and those amounted to approximately S$28.3 million.
GEOGRAPHICAL INFORMATION
The principal source of revenue of the Group was derived from its business in Singapore and accounted for
100% of the Group’s total revenue for the year ended 30 June 2014 and 2013.
SEGMENT INFORMATION
The Group is principally engaged in the provision of electrical engineering services, accounting for 100% of the
Group’s total revenue for the year ended 30 June 2014 and 2013. The Group provides electrical engineering
services mainly for new construction projects in public residential sector in Singapore, which made up
approximately 95.7% of the total revenue for the year ended 30 June 2014 (2013: approximately 88.8%). All
revenue, operating expenses and assets and liabilities are derived from the operations in Singapore.
FINANCIAL REVIEW
Revenue
The Group’s revenue was recognised based on the stage of completion of the projects. During the financial
year ended 30 June 2014, the Group achieved approximately of S$22.6 million in revenue representing an
increase of approximately S$3.9 million or 20.9% from approximately S$18.7 million for the same period in
2013. The increase was mainly due to the significant percentage of work done for more projects for the year
ended 30 June 2014 as compared to that in 2013.
Gross profit and gross margin
The Group’s gross profit increased by approximately S$0.8 million or 9.6% from approximately S$8.3 million
for the year ended 30 June 2013 to approximately S$9.1 million for the year ended 30 June 2014. Such increase
was mainly due to the growth of revenue. The Group’s gross profit margin reduced by approximately 4.1%
from approximately 44.4% for the year ended 30 June 2013 to 40.3% for the year ended 30 June 2014. The
decrease was mainly due to more projects being close to end of completion recorded higher cost savings for
the year ended 30 June 2013 as compared to that for the year ended 30 June 2014.
Other operating income
The Group’s other operating incomes were approximately S$51,477 (2013: $45,513) for the year ended 30 June
2014. Other operating income comprises bank interests received and incentives from Singapore government.
Singapore Government incentives:
Special Employment Credit (“SEC”) in 2011 Budget
As part of the relief measures for employers, the Singapore Government introduced SEC in 2011 Budget Initiatives
to support employers of older workers with aged above 55. This SEC complements other measures to encourage
employers to employ older low-wage Singaporean workers. SEC will run for three years from 2011 to 2013
and it has been extended to 2016.
Kingbo Strike Limited Annual Report 2013/2014
05
Management Discussion and Analysis
(Continued)
Wage Credit Scheme (“WCS”) in 2013 Budget
The Singapore Government has introduced the WCS to help businesses which may face rising wage costs in a
tight labour market. WCS payouts will allow businesses to free up resources to make investments in productivity
and to share the productivity gains with their employees. Over the period from 2013 to 2015, the Singapore
Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage
of S$4,000 and below.
Productivity and Innovation Credit (“PIC”) Bonus in 2014 Budget
The PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for businesses that invest in qualifying
activities under the PIC during the Year of assessment (“YA”) 2013 to 2015, subject to an overall cap of
S$15,000 for all three YAs combined.
Administrative and other operating expenses
The Group’s administrative and other operating expenses for the year ended 30 June 2014 were approximately
S$3.1 million (2013: approximately S$1.4 million) representing an increase of approximately S$1.7 million or
121.4% over the corresponding period in 2013. This was mainly attributable to the increase in Listing expenses
amounted to approximately S$1.1 million, while the remaining S$0.6 million increase was mainly from
professional fee, office rental, travelling expenses and employee benefits.
Finance costs
The finance costs comprised mainly bank charges of S$2,568 for the financial year ended 30 June 2014 (2013:
S$620). Higher bank charges for the year ended 30 June 2014 was due to opening of new bank account in
Hong Kong and bank remittance charges incurred for the professional fees charged by Hong Kong professionals
for the Listing. The Group did not have any bank borrowings, therefore, no borrowing interest incurred.
Income tax expenses
Income tax expenses of the Group amounted to approximately S$1.3 million with effective tax rate of
approximately 18.2% for the year ended 30 June 2014 (2013: approximately S$1.2 million with effective rate
of approximately 15.5%). Despite the decrease in net profit before tax, the tax expenses and the effective rate
was higher mainly due to higher Listing expenses and administrative expenses recorded in the Company which
were not tax deductible for the year ended 30 June 2014 as compared to the same period in 2013.
Net profit after tax
For the year ended 30 June 2014, the Group recorded a net profit after tax of approximately S$5.7 million, a
decrease of approximately S$0.8 million or 12.3% as compared to the net profit of approximately S$6.5 million
for the corresponding period in 2013. The decrease was mainly due to the increase in the Listing expenses
recorded under administrative expenses.
PROSPECTS
The market research by Frost & Sullivan(s) Pte, Ltd. in the Listing document of the Company dated 16 December
2013 (“Prospectus”) showed that the population of Singapore is expected to grow from 5.1 million in 2010 to
6.3 million in 2015. The increase in population is likely to result in increased demand for both public and private
housing. Singapore is viewed as a rewarding immigrant destination in Asia and immigrants are increasingly
relocating to Singapore, thereby stimulating the demand for housing in Singapore. The Directors believe that
the Group’s business will continue to be prosperous in the coming year and the Group will continue to actively
seek opportunities to secure more housing sector projects in Singapore. To cope with future development, the
Group also plans to recruit more staff including those on project sites and back office to meet its growing
business.
06
Kingbo Strike Limited Annual Report 2013/2014
Management Discussion and Analysis
(Continued)
LIQUIDITY AND FINANCIAL RESOURCES
Net current assets
The Group’s net current assets increased from approximately S$1.2 million as at 30 June 2013 to approximately
S$14.6 million as at 30 June 2014. The net increase in net current assets was primarily attributed to the increase
in cash and bank balances as at 30 June 2014. Proceeds from the Initial Public Offering (“IPO”) resulted in
larger cash and bank balances as at 30 June 2014.
Financial position
The Group’s business operation depends on the sufficiency of working capital and effective project cost
management. The source of funds for the operations mainly comes from the cash inflows from operating
activities. As at 30 June 2014, the Group had cash and bank balances, of which approximately 40% were in
Hong Kong dollar and 60% in Singapore dollar, amounted to approximately S$18.3 million (2013: approximately
S$7.2 million, 100% in Singapore dollar). The net increase of approximately S$11.1 million was contributed
from the proceeds received from the IPO by approximately S$9.7 million while the remaining of approximately
S$1.4 million was due to increase in net cash flow from operating activities.
The Group did not have any bank borrowings for the year ended 30 June 2014, therefore no gearing ratio
reported (2013: Nil).
During the year ended 30 June 2014, the Group did not employ any material financial instruments for hedging
purposes.
Working Capital
The average trade receivable turnover was approximately 64 days (2013: 66 days) for the financial year ended
30 June 2014. Average trade receivable turnover is calculated by dividing the average trade receivables (average
of its opening and closing balances) by the revenue for the year and multiplying by 365 days. The project team
monitors the collection from customers on regular basis. The Group achieved slightly improvement in collection
payment from the customers for the year ended 30 June 2014.
The average trade payable turnover was 51 days (2013: 101 days) for the year ended 30 June 2014. Average
trade payable turnover is calculated by dividing the average trade payables (average of its opening and closing
balances) by the purchases for the year and multiplying by 365 days. Considering cash and bank balances have
improved after receiving net proceeds from the IPO, the Group has shortened the payment period on its own
accord in order to build up a good and prompt payment relationship with the suppliers to achieve overall benefit
for the on-going and future purchase pricing.
SIGNIFICANT INVESTMENT, MATERIAL ACQUISITIONS AND DISPOSAL OF SUBSIDIARIES AND
ASSOCIATES
During the year ended 30 June 2014, there was no significant investment, material acquisition or disposal of
subsidiaries and associates by the Company.
CHARGES ON ASSETS
As at 30 June 2014, the Group did not have any charges on its assets (2013: Nil).
CAPITAL EXPENDITURES
For the year ended 30 June 2014, the Group purchased plant and machinery of S$10,852. (2013: S$22,309).
CAPITAL COMMITMENTS
The Group has no capital commitments as at 30 June 2014 (2013: Nil).
Kingbo Strike Limited Annual Report 2013/2014
07
Management Discussion and Analysis
(Continued)
CONTINGENT LIABILITIES
Save as disclosed in note 29 of the financial statement, the Group had no other contingent liabilities as at 30
June 2014.
FOREIGN EXCHANGE RISK
Since the Group mainly operates in Singapore and most of the revenue and transactions arising from its
operations were settled in Singapore dollar, and the Group’s assets and liabilities are primarily denominated in
Singapore dollar, the Directors believe that the Group’s risk in foreign exchange is insignificant and the Group
will have sufficient foreign exchange to meet its foreign exchange requirements. The Group has not experienced
any material difficulties or effects on its operations or liquidity as a result of fluctuations in currency exchange
rates and has not adopted any currency hedging policy or other hedging instruments during the year ended 30
June 2014.
EMPLOYEES AND REMUNERATION POLICY
As at 30 June 2014, the Group had 127 employees (2013: 129). The remuneration package of the Group’s
employees are periodically reviewed and discretionary bonuses may be awarded to employees according to the
assessment of individual performance. The Group provides adequate job training to employees to equip them
with practical knowledge and skills.
08
Kingbo Strike Limited Annual Report 2013/2014
Report of the Directors
The Directors present the report and the audited financial statements for the year ended 30 June 2014.
PRINCIPAL ACTIVITIES
The Company is an investment holding company. The Group is principally engaged in the provision of electrical
engineering services. Details of the principal activities of the subsidiary are set out in note 26 to the financial
statements. There were no significant changes in the nature of the Group’s principal activities during the year.
RESULTS AND DIVIDENDS
The Group’s profit for the year ended 30 June 2014 and the state of affairs of the Company and the Group
at that date are set out in the financial statements on pages 26 to 75 of this annual report.
The Directors do not recommend the payment of any dividends for the year ended 30 June 2014.
USE OF NET PROCEEDS FROM THE IPO
The aggregate net proceeds from the IPO (after deducting underwriting fees and expenses in connection with
the Listing) amounted to approximately S$7.9 million. A balance of approximately S$6.5 million remained
unutilised as at 30 June 2014. During the year, the proceeds has been utilised in accordance with the intended
purpose as stated in the Prospectus.
Intended applications
Estimated
net proceeds
as per the
Prospectus
(approximately
S$’ million)
Actual net
proceeds
(approximately
S$’ million)
Utilised
amount
(approximately
S$’ million)
As at
30 June 2014
Balance
amount
(approximately
S$’ million)
As at
30 June 2014
4.2
1.3
4.2
1.3
0.6
0.2
3.6
1.1
0.8
0.8
0.8
0.8
0.8
0.8
—
—
0.6
0.8
0.8
0.2
7.9
7.9
1.4
6.5
Purchase of materials
Expand workforce
Capital contribution to our joint venture
and associates
Expand our market share
Working capital
SUMMARY FINANCIAL INFORMATION
A summary of the published results and assets and liabilities of the Group for the last four financial years, as
extracted from the audited financial statements is set out on page 76. This summary does not form part of the
audited financial statements.
PLANT AND EQUIPMENT
Details of movements in the plant and equipment of the Group during the year are set out in note 17 to the
financial statements.
SHARE CAPITAL
Details of movements in the Company’s share capital during this year are set out in note 24 to the financial
statements.
Kingbo Strike Limited Annual Report 2013/2014
09
Report of the Directors
(Continued)
PRE-EMPTIVE RIGHTS
There is no provision for pre-emptive rights under the Company’s articles of association (“Articles”) and there
was no restriction against such rights under the laws of Cayman Islands.
PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY
Neither the Company, nor its subsidiary purchased, redeemed or sold any of the Company’s listed securities
from the date of Listing to 30 June 2014.
RESERVES
Details of movements in the reserves of the Company and the Group during the year ended 30 June 2014 are
set out in note 25 to the financial statements and the consolidated statement of changes in equity, respectively.
DISTRIBUTABLE RESERVES
At 30 June 2014, the Company’s reserves available for distribution amounted to S$8,024,104. In addition, the
Company’s share premium account, in the amount of S$12,366,974, may be distributed in the form of fully
paid bonus shares.
MAJOR CUSTOMERS AND SUPPLIERS
During the year ended 30 June 2014, 99.9% (2013: 99.7%) of the Group’s revenue were attributable to five
largest customers with the largest customer accounted for 48.8% (2013: 72.1%) of the Group’s revenue. 65.1%
(2013: 65.9%) of the Group’s purchase of construction material were attributable to five largest construction
material suppliers with the largest construction material supplier accounted for 32.9% (2013: 24.0%) of the
Group’s purchase of construction material.
None of the Directors of the Company or any of their associates or any shareholders (which, to the best
knowledge of the Directors, own more than 5% of the Company’s issued share capital) had any beneficial
interest in the Group’s five largest customers and five largest construction material suppliers for the year ended
30 June 2014.
DIRECTORS
The Directors of the Company during the year ended 30 June 2014 and up to the date of this annual report
were:
Executive Directors:
Mr Yeo Jiew Yew
Mr Sim Yew Heng
10
Kingbo Strike Limited Annual Report 2013/2014
Report of the Directors
Independent non-executive Directors:
Mr Ng Tiow Swee (Chairman)*
Ms Wong Siew Chuan*
Mr Chen Jianyuan, Edwin*
(Continued)
(appointed on 9 December 2013)
(appointed on 9 December 2013)
(appointed on 9 December 2013)
In accordance with the Company’s Articles, all Directors shall retire and being eligible for the election at the
annual general meeting.
*
The Company confirmed that annual confirmation of independence was received from each of the Company’s independent non-executive
Directors pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and all
independent non-executive Directors are considered to be independent.
DIRECTORS’ AND SENIOR MANAGEMENT’S BIOGRAPHIES
Biological details of the Directors and senior management of the Company are set out on pages 16 to 17 of
this annual report.
DIRECTORS’ SERVICE CONTRACTS
Each of the executive Directors namely Mr Yeo Jiew Yew and Mr Sim Yew Heng has respectively entered into
a service contract on 30 December 2013 with Strike Singapore for a term of two years. The service contracts
are automatically renewable for successive term of one year each, unless terminated by not less than three
months’ notice in writing served by either party on the other.
All the independent non-executive Directors namely, Mr Ng Tiow Swee, Ms Wong Siew Chuan and Mr Chen
Jianyuan, Edwin have respectively entered into a letter of appointment with the Company for a term of two
years commencing on 30 December 2013 unless terminated by not less than three months’ notice in writing
served by either party on the other.
Apart from the foregoing, no Director proposed for re-election at the forthcoming annual general meeting has
a service contract with the Company which is not determinable by the Company within one year without
payment of compensation, other than statutory compensation.
DIRECTORS’ REMUNERATION
The Board as a whole has determined the remuneration policy and packages of the Directors. No individual
Director was allowed to involve in deciding his own remuneration. The Directors’ fees are determined with
reference to, among other matters, salaries paid by comparable companies, time commitment and responsibilities
and employment conditions elsewhere in the Group and subject to shareholders’ approval at general meetings.
In addition, the Directors’ remuneration is reviewed by the remuneration committee of the Company annually.
Details of the Directors’ remuneration are set out in note 11 to the financial statements.
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE
Save as disclosed in related party transactions of note 27 to the financial statements, no Directors nor any
controlling shareholders had a material beneficial interest either directly or indirectly, in any contract of
significance to the business of the Group to which the Company, its holding company or its subsidiary was a
party during the year ended 30 June 2014.
MANAGEMENT CONTRACTS
No contracts concerning the management and administration of the whole or any substantial part of the business
of the Company were entered into or existed during the year ended 30 June 2014.
Kingbo Strike Limited Annual Report 2013/2014
11
Report of the Directors
(Continued)
SUFFICIENCY OF PUBLIC FLOAT
As at the date of this report, based on information that is publicly available to the Company and within the
knowledge of the Directors, the Directors confirm that the Company has maintained the amount of public float
as required under the Listing Rules.
SHARE OPTION SCHEME
At no time during the year were there rights to acquire benefits by means of the acquisition of shares in or
debentures of the Company granted to any of the Directors or their respective spouses or minor children, or
were any such rights exercised by them; or was the Company, its holding company, or its subsidiary a party to
any arrangement to enable the Directors to acquire such rights in any other body corporate.
DIRECTORS’ INTERESTS IN COMPETING BUSINESS
None of the Directors nor their respective associates is interested in any business that competes with or is likely
to compete, either directly or indirectly, with the business of the Group.
CONNECTED TRANSACTION AND CONNECTED PERSON
During the year ended 30 June 2014, the Group has entered into transaction with its joint venture, YL Integrated
Pte. Ltd. (“YL”). YL is owned as to 50% by the subsidiary, Strike Electrical Engineering Pte. Ltd. (“Strike
Singapore”) and as to 50% by a former employee and ex-director of Strike Singapore, who resigned his
directorship on 29 May 2013. YL, being an associate of a former director of Strike Singapore, was a connected
person of the Company.
Continuing connected transactions
On 27 February 2012, Strike Singapore and YL entered into an arrangement pursuant to which Strike Singapore
agreed to engage YL as a subcontractor to supply labour, materials and equipment for electrical works and
other relevant works for a public residential project at a total consideration of S$6,081,195 (equivalent to
approximately HK$37.1 million) for a period of 25 months commencing from March 2012 to March 2014, in
accordance with the main contract with the customer. The consideration was determined based on the estimate
of market rate for comparable projects, taking into account their scope, size and complexity and contract value.
The transaction was carried out by the Group in the ordinary and usual course of business, on either normal
commercial terms or terms no less favourable to the Group than those available from independent third parties.
Approximately S$5.33 million (HK$32.51 million) was set as annual cap for the year ended 30 June 2014.
During the year ended 30 June 2014, the Group paid a subcontractor fee of S$3,645,972 (2013: S$661,663)
to YL. According to the Listing Rules, YL is an associate of a former director of Strike Singapore, a connected
person of the Company. With effect from 29 May 2014, being twelve months from the date of which the
former director of Strike Singapore resigned, YL will no longer be a connected person of the Company and any
arrangement to be entered into with YL will no longer constitute a continuing connected transaction of the
Group.
12
Kingbo Strike Limited Annual Report 2013/2014
Report of the Directors
(Continued)
Pursuant to rule 14A.55 of the Listing Rules, the independent non-executive Directors of the Company have
conducted an annual review and confirmed to the Board that during the year ended 30 June 2014, the continuing
connected transaction between Strike Singapore and YL has been entered into:
1.
in the ordinary and usual course of business of the Group;
2.
on normal commercial terms; and
3.
in accordance with the agreement governing such transactions on terms that are fair and reasonable and
in the interests of the shareholders of the Company as a whole.
Ernst & Young, the Company’s auditors, were engaged to report on the Group’s continuing connected
transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements
Other Than Audits or Reviews of Historical Financial Information and with reference to Practice Note 740 Auditor’s
Letter on Continuing Connected Transactions under the Hong Kong Listing Rules issued by the Hong Kong
Institute of Certified Public Accountants. Ernst & Young had issued their unqualified letter containing their
findings and conclusions in respect of the continuing connected transaction disclosed above by the Group in
accordance with rule 14A.38 of the Listing Rules. A copy of the auditors’ letter has been provided by the
Company to the Stock Exchange.
DIRECTORS’ AND CHIEF EXECUTIVE INTERESTS AND SHORT POSITIONS IN THE SHARES,
UNDERLYING SHARES AND DEBENTURES
As at 30 June 2014, the interests and short positions of the Directors and chief executives in shares, underlying
shares or debentures of the Company or any associates within the meaning of Part XV of the Securities and
Futures Ordinance (Chapter 571 of the laws of Hong Kong) (“SFO”) which were:
(i)
required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part
XV of the SFO;
(ii)
required to be recorded in the register required to be kept under Section 352 of the SFO; or
(iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers (the “Model Code”) set out in appendix 10 of the Listing Rules, were as
follows:
Long positions in ordinary shares of the immediate and ultimate holding company, Victrad Enterprise (Pte) Ltd
(“Victrad”):
Name of Director
Mr Yeo Jiew Yew
Mr Sim Yew Heng
Directly
beneficially
owned
S$
990,000
990,000
Percentage of
interest in the
ultimate holding
company’s issued
share capital
Total
S$
%
990,000
990,000
50%
50%
Kingbo Strike Limited Annual Report 2013/2014
13
Report of the Directors
(Continued)
Long positions in ordinary shares of the Company:
Name of Director
Capacity/nature of interests
Mr Yeo Jiew Yew
Mr Sim Yew Heng
Interest in a controlled corporation
Interest in a controlled corporation
Percentage of
interest in the
Number of shares/ Company’s issued
share capital
underlying shares
480,000,000 (note 1)
480,000,000 (note 1)
75%
75%
Note:
(1)
480,000,000 shares are registered in the name of Victrad, an investment holding company incorporated in Singapore with limited liability
on 24 July 1981, whose issued share capital is held by Mr Yeo Jiew Yew and Mr Sim Yew Heng as to 50% shareholding interest each,
and Victrad is a substantial shareholder holding a 75% shareholding interest in the Company. Under the SFO, Mr Yeo Jiew Yew and
Mr Sim Yew Heng are deemed to be interested in 480,000,000 shares registered in the name of Victrad. Mr Yeo and Mr Sim are
brothers.
INTERESTS DISCLOSEABLE UNDER THE SFO AND SUBSTANTIAL SHAREHOLDERS
As at 30 June 2014, the interests and short positions of the person or company in the shares or underlying
shares of the Company which would be required to be disclosed under the provisions of Division 2 and 3 of
Part XV of the SFO and recorded in the register of the Company required to be kept under Section 336 of the
SFO were as follows:
Name of Director
Long/short
positions
Capacity/nature of interests
Victrad
Mr Yeo Jiew Yew
Mr Sim Yew Heng
Long Position
Long Position
Long Position
Beneficial interest
Interest in a controlled corporation
Interest in a controlled corporation
Number of shares/
underlying shares
Percentage of
interest in the
Company’s issued
share capital
480,000,000 (note 1)
480,000,000 (note 1)
480,000,000 (note 1)
75%
75%
75%
Note:
(1)
480,000,000 shares are registered in the name of Victrad, which is owned as to 50% by Mr Yeo Jiew Yew and as to 50% by Mr Sim
Yew Heng. Under the SFO, Mr Yeo Jiew Yew and Mr Sim Yew Heng are deemed to be interested in 480,000,000 shares registered in
the name of Victrad. Mr Yeo and Mr Sim are brothers.
Save as disclosed above, as at 30 June 2014, no person, other than the Directors and chief executive of the
Company, whose interests are set out in the section “Directors’ and chief executive’s interests and short positions
in shares, underlying shares and debentures” above, had registered an interest or short position in the shares
or underlying shares of the Company that was required to be recorded pursuant to Section 336 of the SFO.
14
Kingbo Strike Limited Annual Report 2013/2014
Report of the Directors
(Continued)
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code as the code of conduct of the Company regarding the Directors’
transactions of the listed securities of the Company. The Company has made specific enquiry to all Directors,
and all Directors have confirmed that they had complied with the Model Code and its code of conduct during
the period from the date of Listing to 30 June 2014.
AUDIT COMMITTEE AND REVIEW OF FINANCIAL INFORMATION
The Board established an audit committee on 9 December 2013 with written terms of reference in compliance
with the Listing Rules, particularly the Corporate Governance Code as set out in appendix 14 of the Listing
Rules. The audit committee of the Company which comprises three independent non-executive Directors, namely
Ms Wong Siew Chuan (Chairman), Mr Ng Tiow Swee and Mr Chen Jianyuan, Edwin, has reviewed and discussed
with the management of the Company regarding the Company’s financial statements for the year ended 30
June 2014, the auditing, the accounting principles and practices adopted by the Group, as well as internal
control and financial reporting matters.
EVENTS AFTER THE REPORTING PERIOD
Details of the significant events of the Group after the reporting period are set out in note 32 to the financial
statements.
AUDITOR
Ernst & Young retire and a resolution for their reappointment as auditor of the Company will be proposed at
the forthcoming annual general meeting of the Company.
On behalf of the Board
Kingbo Strike Limited
Mr Yeo Jiew Yew
Managing Director
Hong Kong, 22 September 2014
Kingbo Strike Limited Annual Report 2013/2014
15
Biography of the Directors
and Senior Management
DIRECTORS
Executive Directors
Mr Yeo Jiew Yew (岑有孝), aged 59, founder of our Group, was appointed as our Director on 19 June 2013
and re-designated as our executive Director, managing director, member of remuneration committee and
nomination committee of the Company on 9 December 2013. Mr Yeo is also the director of our subsidiary,
Strike Singapore, appointed on 21 April 2009. Mr Yeo is responsible for our Group’s overall management,
strategic planning and business development. He has approximately 30 years of experience in the electrical
engineering industry. Mr Yeo started his career as an electrical apprentice in 1969. Upon acquiring the necessary
skills and knowledge of the electrical engineering business, Mr Yeo founded Victrad in 1981 and served as its
managing director till now. Victrad is an investment holding company and a substantial shareholder of the
Company. Apart from the Group, Mr Yeo is a non-executive director of Lantrovision (S) Ltd, a company listed
on the Singapore Exchange Securities Trading Limited engaged in business of providing information technology
infrastructure, cabling services and selling structured cabling systems and components since 28 August 2008.
Mr Yeo is also a member of the school management committee of Pei Chun Public School, a primary school
in Singapore since 1996. Mr Yeo is the brother of Mr Sim Yew Heng.
Mr Sim Yew Heng (岑有興), aged 53, was appointed as our Director on 19 June 2013 and re-designated as
our executive Director on 9 December 2013. Mr Sim is also a director of Strike Singapore, appointed on 21
April 2009. Mr Sim is responsible for leading our operational departments and providing guidance and
management experience in project management and contract negotiation. Mr Sim started his career in 1976 as
an electrical apprentice with an electrical engineering subcontractor. He has approximately 30 years of experience
in the electrical engineering industry, and is capable of handling large-scale projects, including analyses in
tendering for potential projects. Mr Sim is also a director of Victrad and he is the brother of Mr Yeo Jiew Yew.
Independent Non-Executive Directors
Mr Ng Tiow Swee (黃朝瑞), age 57, was appointed as our chairman of the Board, independent non-executive
Director, chairman of remuneration committee and nomination committee of the Company and member of
audit committee of the Company on 9 December 2013, and is responsible for providing independent judgment
on issues of strategy, performance, resources and standard of conduct of our Company. Mr Ng graduated in
26 May 1981 from the National University of Singapore with a Bachelor degree in Business Administration. Mr
Ng has 30 years of working experience in the sales and distribution of electrical installation equipment business
in Singapore.
Ms Wong Siew Chuan (黃秀娟), age 48, was appointed as our independent non-executive Director, chairman
of audit committee of the Company and member of nomination committee of the Company on 9 December
2013 and is responsible for providing independent judgment on issues of strategy, performance, resources and
standard of conduct of our Company. Ms Wong graduated from the National University of Singapore with a
Bachelor of Accountancy degree in 1988 and is a non-practising Fellow Chartered Accountant Singapore with
the Institute of Singapore Chartered Accountants. Ms Wong has more than 20 years of experience in accounting
and finance.
Mr Chen Jianyuan, Edwin (陳建元), aged 32, was appointed as our independent non-executive Director,
member of audit committee and remuneration committee of the Company on 9 December 2013 and is
responsible for providing independent judgment on issues of strategy, performance, resources and standard of
conduct of our Company. Mr Chen graduated from Monash University Australia, with a honours degree in
bachelor of business, specialising in banking and finance in July 2006. Mr Chen has accumulated approximately
6 years of corporate finance experience in Singapore and Hong Kong.
16
Kingbo Strike Limited Annual Report 2013/2014
Biography of the Directors and Senior Management
(Continued)
SENIOR MANAGEMENT
Ms Chan Bee Fong, aged 46, was appointed as the Senior Finance Manager of our Group on 1 July 2013.
Ms Chan is responsible for overseeing the financial, accounting, taxation and secretarial affairs of our Group.
She has approximately 20 years of experience in the electrical engineering industry. Ms Chan has a London
Chamber of Commerce Diploma in Management Accounting in 1989.
Mr Poon Hiu Chuin, aged 46, was appointed as the Project Director of our Group on 1 July 2013. He is
responsible for overseeing the project department of our Group, which comprises project engineers, technicians
and foreign workers on site. His roles include managing, executing and coordinating the entire electrical
engineering project. He obtained a bachelor’s degree (honours) in electrical engineering from Queen’s University
of Belfast in July 1996. He has been qualified as a licensed electrical technician by the EMA since July 2003.
Ms Lim Poh Khim, aged 48, was appointed as the Purchasing Manager of our Group on 1 July 2013. She is
responsible for overseeing the purchasing department of our Group, which handles negotiations and
communications with suppliers, inventory management, and ensuring that suppliers deliver on-time to ensure
that each project is carried out smoothly.
Ms Goey Lee Eng, aged 46, was appointed as the Contract Manager of our Group on 1 July 2013. She is
responsible for overseeing the contract and tender department, tasked to review tender and contract terms,
contract negotiation, project budget review and supporting the project department in administrative matters
relating to the awarded project.
Kingbo Strike Limited Annual Report 2013/2014
17
Corporate Governance Report
The Company has adopted the requirements of the code provisions of the Corporate Governance Code and
Corporate Governance Report (the “Corporate Governance Code”) contained in appendix 14 to the Listing Rules.
On 24 July 2014, the Company had adopted Board Diversity Policy in accordance to Code A5.6 of the Corporate
Governance Code and updated the Company and the Stock Exchange websites under the revised written terms
of reference for the nomination committee of the Company. Save as disclosed above, the Company has complied
with the Corporate Governance Code from the date of Listing to 30 June 2014.
THE BOARD
From the date of Listing to the year ended 30 June 2014, the Board comprises two executive Directors and
three independent non-executive Directors. The Company has complied with rules 3.10(1) and 3.10A of the
Listing Rules. There were three independent non-executive Directors in the Board and the number of independent
non-executive Directors represents more than one-third of the Board. As such, there exists a strong independent
element in the Board, which can effectively exercise independent judgement. The Company has also complied
with rule 3.10(2) of the Listing Rules which stipulates that one of the independent non-executive Directors must
possess appropriate professional qualification or accounting or related financial management expertise. In
compliance with the Corporate Governance Code, the independent non-executive Directors are expressly
identified as such in all corporate communications that disclose the names of the Directors.
The Company has received from each of its independent non-executive Directors an annual confirmation of his
independence pursuant to rule 3.13 of the Listing Rules. The Group considers all independent non-executive
Directors to be independent under the Listing Rules. Save as disclosed in the section headed “Biography of the
Directors and Senior Management” in this annual report, there is no financial, business, family or other material/
relevant relationship among the members of the Board, in particular, between the Chairman of the Board and
the managing director of the Company.
BOARD MEETINGS
The Board meets regularly and, in addition to regular meetings, ad-hoc meeting will be arranged if warranted
by particular circumstances. Under code provision A.1.1 of the Corporate Governance Code, the Board shall
meet regularly and at least four times a year at approximately quarterly intervals. The Company was listed on
30 December 2013 from the date of Listing up to the year ended 30 June 2014 and to the date of this report,
two Board meetings was held with attendance of individual members as set out below:
Attendance
Mr
Ms
Mr
Mr
Mr
Ng Tiow Swee (Chairman)
Wong Siew Chuan
Chen Jianyuan, Edwin
Yeo Jiew Yew
Sim Yew Heng
From date
of Listing to
year ended
30 June 2014
From
01 July 2014 to
date of
this report
1/1
1/1
0/1
1/1
0/1
1/1
1/1
1/1
1/1
1/1
BOARD RESPONSIBILITIES AND DELEGATION
The Board
responsible
focuses on
monitoring
supervising
18
is responsible to the shareholders for leadership and control of the Group and be collectively
for promoting the success of the Group by directing and supervising the Group’s affairs. The Board
formulating the Group’s overall strategies, approving the annual development plan and budget;
financial and operating performance; reviewing the effectiveness of the internal control system and
and managing management’s performance.
Kingbo Strike Limited Annual Report 2013/2014
Corporate Governance Report
(Continued)
The Board delegates the day-to-day management, administration and operation of the Group to the senior
management. The delegated functions are reviewed by the Board periodically to ensure they remain appropriate
to the needs of the Group. The Board gives clear directions to the management as to the matters that must
be approved by the Board before decisions are made on behalf of the Group by the senior management.
CHAIRMAN AND MANAGING DIRECTOR
Under code provision A.2.1, the roles of chairman and managing director should be separated and should not
be performed by the same individual. In compliance with the Corporate Governance Code, the Group has
appointed a separate chairman and managing director of the Company since 9 December 2013. In order to
ensure that there is clear division of responsibilities between the chairman of the Board and the managing
director of the Company, the two positions are assumed by different individuals, Mr Ng Tiow Swee, the chairman
of the Board, is responsible for the operation of the Board and ensuring corporate governance compliance. Mr
Yeo Jiew Yew, the managing director of the Company, with the assistance of other members of the Board and
senior management, is responsible for the management of the Group’s business, the formulation of the Group’s
strategies and the implementation of significant policies. The chairman of the Board ensures that all Directors
are properly briefed on issues arising at the Board meetings and receive adequate, complete and reliable
information in a timely manner.
DIRECTORS’ PROFESSIONAL DEVELOPMENT PROGRAMME
All Directors confirmed that they had complied with code provision A.6.5 of the Corporate Governance Code
for the year ended 30 June 2014. The Company has arranged an in-house training on the Listing Rules in the
form of a seminar during the year conducted by the Company’s legal adviser as to Hong Kong Laws and relevant
training materials have been distributed to all the Directors. All Directors (Mr Yeo Jiew Yew, Mr Sim Yew Heng,
Mr Ng Tiow Swee, Ms Wong Siew Chuan and Mr Chen Jianyuan, Edwin) had attended the in-house training.
The training covered topics including the Listing Rules and Corporate Governance Code, legal compliance and
directors’ duty, etc.
NOMINATION OF DIRECTORS
New Directors of the Company recommended by the nomination committee of the Company will be assessed
by taking into criteria such as experience, balance of skills and diversity of perspectives appropriate to the
requirements of the business of the Company when considering new Directors appointments.
The Board shall then make recommendations to shareholders on Directors standing for re-election, providing
sufficient biographical details of Directors to enable shareholders to make an informed decision on the re-election,
and where necessary, nominating appropriate persons to fill causal vacancies or as additions to the Board.
APPOINTMENTS, RE-ELECTION AND REMOVAL
All independent non-executive Directors are appointed for a specific term of not more than 3 years. All Directors,
including the chairman are required to retire from office by rotation and are subject to re-election by shareholders
at annual general meeting at least once every 3 years.
Under the Company’s Articles, one-third of the Directors, must retire and be eligible for re-election at each
annual general meeting. As such, no Director has a term of appointment longer than 3 years.
Kingbo Strike Limited Annual Report 2013/2014
19
Corporate Governance Report
(Continued)
BOARD COMMITTEES
The Board established certain Board committees with specific written terms of reference which deal clearly with
the committee’s authority and duties and require the committees to report back on their decisions or
recommendations. The written terms of reference of the Board committees are available on the website of the
Company and the Stock Exchange.
NOMINATION COMMITTEE
The Company established a nomination committee on 9 December 2013 which is primarily responsible for
making recommendations to the Board regarding the Group’s engagement of appropriate Directors with skills,
knowledge and experience to complement the Company’s corporate strategies. The Company recognises the
benefits of having a diverse Board to enhance the quality of its performance. The Board diversity has been
considered from a number of aspects, including but not limited to gender, age, cultural and educational
background, professional experience, skill, knowledge and length of service, all of which the Company considers
to be important to enhance the quality of its performance.
The nomination committee of the Company comprises Mr Ng Tiow Swee (Chairman), Ms Wong Siew Chuan
and Mr Yeo Jiew Yew.
The Company was listed on 30 December 2013, from the date of Listing up to the date of this report, one
meeting of nomination committee of the Company was held after the year ended 30 June 2014 with attendance
of individual members as set out below to review and consider the composition of the Board and senior
management:
Attendance
Mr Ng Tiow Swee (Chairman)
Ms Wong Siew Chuan
Mr Yeo Jiew Yew
From
01 July 2014 to
date of
this report
1/1
1/1
1/1
REMUNERATION COMMITTEE
The Company established a remuneration committee on 9 December 2013 which is primarily responsible for
marking recommendations to the Board regarding the Group’s policy and structure for all Directors’ and senior
management remuneration. During the year, the committee review and approve the management’s remuneration
proposals and make recommendations to the Board on the remuneration packages of individual executive
Directors and senior management.
The remuneration committee of the Company comprises Mr Ng Tiow Swee (Chairman), Mr Chen Jianyuan,
Edwin and Mr Yeo Jiew Yew.
20
Kingbo Strike Limited Annual Report 2013/2014
Corporate Governance Report
(Continued)
The Company was listed on 30 December 2013, from the date of Listing up to the date of this report, one
meeting of remuneration committee was held after the year ended 30 June 2014 with attendance of individual
members as set out below to review and consider the specific remuneration packages of the Company’s executive
Directors and senior management.
From
01 July 2014 to
date of
this report
Attendance
Mr Ng Tiow Swee (Chairman)
Mr Chen Jianyuan, Edwin
Mr Yeo Jiew Yew
1/1
1/1
1/1
AUDIT COMMITTEE
The Company established an audit committee on 9 December 2013 comprising three independent non-Executive
Directors, namely Ms Wong Siew Chuan (Chairman), Mr Ng Tiow Swee and Mr Chen Jianyuan, Edwin. The
audit committee of the Company is primarily responsible for reviewing the financial reporting process and internal
control systems of the Group. Policies in relation to financial controls, internal controls and the re-appointment
of the independent auditor were reviewed by the audit committee of the Company at the meetings.
The audit committee of the Company has reviewed this annual report and confirmed that this annual report is
complete, accurate and complies with all applicable rules and regulations, including but not limited to the Listing
Rules and the Corporate Governance Code. There is no disagreement between the Board and the audit committee
of the Company regarding the selection and appointment of the independent auditor.
The Company was listed on 30 December 2013, from the date of Listing up to the year ended 30 June 2014
and to the date of this report, two meetings of audit committee of the Company were held with attendance
of individual members as set out below:
Attendance
Ms Wong Siew Chuan (Chairman)
Mr Ng Tiow Swee
Mr Chen Jianyuan, Edwin
From date
of Listing to
year ended
30 June 2014
From
01 July 2014 to
date of
this report
1/1
1/1
0/1
1/1
1/1
1/1
INTERNAL CONTROL
The Board is committed to manage business risks and to maintain a proper and effective system of internal
control to safeguard the shareholders’ investment and the Group’s assets. The Board, through the audit
committee of the Company, has conducted annual review of the effectiveness of the Group’s system of internal
control covering financial, operational and compliance policies.
Kingbo Strike Limited Annual Report 2013/2014
21
Corporate Governance Report
(Continued)
COMPLIANCE OF DEED OF NON-COMPETITION
The independent non-executive Directors were delegated with the authority to review, on an annual basis, the
compliance with the Deed of Non-competition executed by the controlling shareholders at 9 December 2013,
Victrad, together with Mr Yeo Jiew Yew and Mr Sim Yew Heng (collectively “Covenantors”) in favour of the
Company (for itself and for the benefit of each member of the Group). Each of the Covenantors has confirmed
that he/it had complied with the Deed of Non-competition from the date of the Deed of Non-competition and
up to the date of this annual report.
The independent non-executive Directors were not aware of any non-compliance of the Deed of Non-competition
given by the Covenantors since the date of the Deed of Non-competition and up to 30 June 2014. Details of
the Deed of Non-competition have been set out in the section headed “Relationship with Controlling
Shareholders” in the Prospectus.
AUDITORS’ REMUNERATION
The remuneration in respect of audit services provided by the Company’s auditors amounted to S$89,500 and
a non-audit services of S$45,980 were provided by the Company’s auditors during the year ended 30 June
2014.
COMMUNICATION WITH SHAREHOLDERS
The Board and senior management recognise the responsibility of safeguarding the interest of shareholders of
the Company and provide transparent and real-time discloseable information on the Company so as to keep
the shareholders and investors abreast of the Company’s position and help them to make the informed
investment decision. Information of the Company and the Group are delivered to the shareholders through a
number of channels, which includes annual report, interim report, announcements and circulars. The latest
information of the Company and the Group together with the published documents are also available on the
Company’s website.
The Company will hold annual general meeting every year as an appropriate media for direct communication
between the Board and the shareholders. Shareholders can raise questions directly to the Board in respect of
the business performance and future development of the Group at such annual general meetings.
The forthcoming annual general meeting to be held on 14 November 2014 will be the first general meeting of
the Company from the date of Listing.
From the date of Listing and up to 30 June 2014, there had been no significant change in the Company’s
constitutional documents.
PROCEDURES FOR DIRECTING SHAREHOLDERS’ ENQUIRIES TO THE BOARD
Shareholders may at any time send their enquiries and concerns to the Board in writing through the Company
Secretary whose contact details are as follows:
Attention: Mr Li Chi Chung, Solicitor, Hong Kong
19th Floor, Prosperity Tower
39 Queen’s Road Central
Central
Hong Kong
Shareholders’ enquiries and concerns are forwarded to the Board and/or relevant Board committees of the
Company, where appropriate, to answer the shareholders’ enquiries. The primary corporate contact person at
the Company is Ms Chan Bee Fong, Senior Finance Manager of the Group.
22
Kingbo Strike Limited Annual Report 2013/2014
Corporate Governance Report
(Continued)
PROCEDURES FOR PUTTING FORWARD PROPOSALS AT GENERAL MEETINGS BY
SHAREHOLDERS
Pursuant to Article 57 and 58 of the Articles, each general meeting, other than an annual general meeting,
shall be called an extraordinary general meeting. General meetings may be held in any part of the world as
may be determined by the Board. The Board may whenever it thinks fit call extraordinary general meetings.
Any one or more shareholders holding at the date of deposit of the requisition not less than one tenth of the
paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all
times have the right, by written requisition to the Board or the secretary of the Company, to enquire an
extraordinary general meeting to be called by the Board for the transaction of any business specified in such
requisition. Such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days
of such deposit, the Board fails to proceed to convene such meeting, the requisitionist(s) himself (themselves)
may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the
failure of the Board shall be reimbursed to the requisitionist(s) by the Company.
Pursuant to Article 85 of the Articles, no person, other than a Director retiring at the meeting, shall, unless
recommended by the Directors for election, be eligible for election as a Director at any general meeting unless
a notice signed by a member (other than the person to be proposed) duly qualified to attend and vote at the
meeting for which such notice is given of his intention to propose such person for election and also a Notice
signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office
or at the registration office provided that the minimum length of the period, during which such Notice(s) are
given, shall be at least 7 days and that (if the Notices are submitted after the despatch of the notice of the
general meeting appointed for such election) the period for lodgement of such Notice(s) shall commence on
the day after the despatch of the notice of general meeting appointed for such election and end no later than
7 days prior to the date of such general meeting.
ANNUAL GENERAL MEETING
The annual general meeting of the Company for the year ended 30 June 2014 will be held at 30 Orange Grove
Road, Singapore 258352 on Friday, 14 November 2014, at 10:00 a.m. A circular containing the notice of
convening the annual general meeting and the proxy form will be issued and despatched to shareholders together
with this annual report.
CLOSURE OF REGISTER OF MEMBERS
In order to determine entitlement of shareholders of the Company with regards to the right to attend and vote
at the forthcoming annual general meeting, the register of members of the Company will be closed from 12
November 2014 to 14 November 2014, both days inclusive, during which period no share transfer will be
effected. All share transfer documents accompanied by the relevant share certificates must be lodged with the
Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited, at 18th Floor,
Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong for registration not later
than 4:00 p.m. on 11 November 2014.
Kingbo Strike Limited Annual Report 2013/2014
23
Independent Auditors’ Report
To the shareholders of Kingbo Strike Limited
(Incorporated in the Cayman Islands with limited liability)
We have audited the consolidated financial statements of Kingbo Strike Limited (the “Company”) and its
subsidiary (together, the “Group”) set out on pages 26 to 75, which comprise the consolidated and company
statements of financial position as at 30 June 2014, and the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and a summary of significant accounting policies and other explanatory
information.
DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial Reporting Standards (“IFRSs”) issued by the
International Accounting Standards Board (the “IASB”) and the disclosure requirements of the Hong Kong
Companies Ordinance, and for such internal control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Our
report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards
or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute
of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation of consolidated financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
24
Kingbo Strike Limited Annual Report 2013/2014
Independent Auditors’ Report
(Continued)
OPINION
In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the
Company and of the Group as at 30 June 2014, and of the Group’s profit and cash flows for the year then
ended in accordance with International Financial Reporting Standards and have been properly prepared in
accordance with the disclosure requirements of the Hong Kong Companies Ordinance.
Ernst & Young
Certified Public Accountants
22/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
22 September 2014
Kingbo Strike Limited Annual Report 2013/2014
25
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Year ended 30 June 2014
Notes
REVENUE
Cost of sales
7
Gross profit
Other operating income
Administrative expenses
Other operating expenses
Finance costs
Share of results of a joint venture
Share of results of associates
PROFIT BEFORE TAX
Income tax expense
8
2014
S$
2013
S$
22,628,298
(13,515,642)
18,660,508
(10,376,929)
9,112,656
8,283,579
51,447
45,513
9
(2,771,721)
(292,496)
(2,568)
499,930
426,059
(1,273,041)
(87,832)
(620)
579,104
195,920
10
12
7,023,307
(1,276,038)
7,742,623
(1,201,053)
5,747,269
6,541,570
1.00
1.28
PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Earnings per share attributable to equity holders
of the Company
Basic and diluted earnings per share (S$ cents)
14
Details of the dividends payable and proposed for the year are disclosed in note 13 to the financial statements.
26
Kingbo Strike Limited Annual Report 2013/2014
Consolidated Statement of Financial Position
30 June 2014
2014
S$
2013
S$
1,336,357
849,705
95,342
2,377,461
836,427
423,646
130,466
1,207,500
4,658,865
2,598,039
2,644,185
43,809
26,282
1,618,183
18,252,010
6,855,403
57,694
131,699
2,822,189
7,249,375
22,584,469
17,116,360
1,296,011
6,730,804
1,190,632
14,717,534
8,026,815
15,908,166
NET CURRENT ASSETS
14,557,654
1,208,194
TOTAL ASSETS LESS CURRENT LIABILITIES
19,216,519
3,806,233
16,208
19,398
19,200,311
3,786,835
1,048,880
12,366,974
8,024,104
(2,239,647)
48,880
3,700,767
2,276,835
(2,239,647)
19,200,311
3,786,835
Notes
NON-CURRENT ASSETS
Interest in a joint venture
Interests in associates
Plant and equipment
Trade and other receivables
15
16
20
Total non-current assets
CURRENT ASSETS
Gross amount due from customers for contract work
in progress
Inventories
Prepayments
Trade and other receivables
Cash and cash equivalents
18
20
21
Total current assets
CURRENT LIABILITIES
Income tax payable
Trade and other payables
22
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities
Net assets
EQUITY
Share capital
Share premium
Retained earnings
Merger reserves
24
24
Total equity
Yeo Jiew Yew
Director
Sim Yew Heng
Director
Kingbo Strike Limited Annual Report 2013/2014
27
Consolidated Statement of Changes in Equity
Year ended 30 June 2014
Attributable to equity holders of the Company
Notes
At 1 July 2012
Profit and total comprehensive
income for the year
Share
premium
Retained
earnings
Merger
reserves
Total
Equity
(note 24)
(note 24)
S$
S$
S$
S$
S$
—
—
3,889,265
1,510,000
5,399,265
(note 25)
—
—
6,541,570
—
6,541,570
Dividends paid
13
—
—
(8,154,000)
—
(8,154,000)
Adjustment resulting from the
Reorganisation
25
—
—
—
Issuance of new ordinary shares on
incorporation and the
Reorganisation
24
48,880
3,700,767
—
—
3,749,647
48,880
3,700,767
2,276,835
(2,239,647)
3,786,835
—
—
5,747,269
—
5,747,269
At 30 June 2013 and 1 July 2013
Profit and total comprehensive
income for the year
(3,749,647)
(3,749,647)
Issuance of share capital by
capitalisation issue
24
790,164
(790,164)
—
—
—
Issuance of share capital pursuant to
IPO
24
209,836
10,281,967
—
—
10,491,803
Listing expenses taken against share
premium
24
—
(825,596)
—
—
(825,596)
1,048,880
12,366,974
8,024,104
(2,239,647)
19,200,311
At 30 June 2014
28
Share
capital
Kingbo Strike Limited Annual Report 2013/2014
Consolidated Statement of Cash Flows
Year ended 30 June 2014
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Bank interest income
Share of results of a joint venture
Share of results of associates
Depreciation of plant and equipment
Loss on plant and equipment written off
8
17
2014
S$
2013
S$
7,023,307
7,742,623
(7,296)
(499,930)
(426,059)
41,217
4,759
(26,598)
(579,104)
(195,920)
40,800
—
6,135,998
6,981,801
Decrease/(increase) in the gross amount due from
customers for contract work in progress
Decrease in inventories
Decrease/(increase) in prepayments
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
4,211,218
13,885
105,417
34,045
(7,986,730)
(1,356,163)
5,748
(108,306)
(1,142,522)
(1,772,402)
Cash generated from operations
Interest received
Overseas tax paid
2,513,833
7,296
(1,173,849)
2,608,156
26,598
(662,720)
1,347,280
1,972,034
Net cash flows generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in a joint venture
Dividend distribution from a joint venture
Purchase of items of plant and equipment
17
Net cash flows (used in)/generated from investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Issue of shares pursuant to the IPO, net of listing
expenses taken to equity
Net cash flows generated from/(used) in financing
activities
—
—
(10,852)
(25,000)
125,000
(22,309)
(10,852)
77,691
13
—
(8,154,000)
24
9,666,207
—
9,666,207
(8,154,000)
Kingbo Strike Limited Annual Report 2013/2014
29
Consolidated Statement of Cash Flows
(Continued)
Year ended 30 June 2014
2014
S$
2013
S$
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at beginning of year
11,002,635
7,249,375
(6,104,275)
13,353,650
CASH AND CASH EQUIVALENTS AT END OF YEAR
18,252,010
7,249,375
21
10,251,791
3,513,730
21
8,000,219
3,735,645
18,252,010
7,249,375
Note
ANALYSIS OF BALANCES OF CASH AND CASH
EQUIVALENTS
Cash at banks and on hand
Non-pledged time deposits with original maturity of less
than three months when acquired
Cash and cash equivalents as stated in the
consolidated statement of financial position
30
Kingbo Strike Limited Annual Report 2013/2014
Statement of Financial Position
30 June 2014
Notes
NON-CURRENT ASSET
Investment in a subsidiary
26
CURRENT ASSETS
Prepayments
Cash and cash equivalents
21
Total current assets
CURRENT LIABILITIES
Other payables
22
NET CURRENT ASSETS/(LIABILITIES)
Net assets
EQUITY
Share capital
Share premium
Accumulated losses
24
24
25
Total equity
Yeo Jiew Yew
Director
2014
S$
2013
S$
3,749,647
3,749,647
3,749,647
3,749,647
19,562
7,377,356
90,827
—
7,396,918
90,827
29,453
511,587
29,453
511,587
7,367,465
(420,760)
11,117,112
3,328,887
1,048,880
12,366,974
(2,298,742)
48,880
3,700,767
(420,760)
11,117,112
3,328,887
Sim Yew Heng
Director
Kingbo Strike Limited Annual Report 2013/2014
31
Notes to Financial Statements
30 June 2014
1.
CORPORATE INFORMATION
Kingbo Strike Limited (the “Company”) was incorporated in the Cayman Islands on 19 June 2013 as an
exempted company with limited liability under the Companies Law, Cap. 22 of the Cayman Islands. The
Company’s registered office address is Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins
Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The Company was registered with the
Registrar of Companies in Hong Kong as a non-Hong Kong company under Part XI of the Companies
Ordinance (Chapter 622 of the laws of Hong Kong) (the “Companies Ordinance”) on 5 September 2013
and the principal place of business in Hong Kong registered is at 19th Floor, Prosperity Tower, 39 Queen’s
Road Central, Central, Hong Kong.
The Company is an investment holding company. The Group is principally engaged in the provision of
electrical engineering services. The shares of the Company were listed on the Main Board of The Stock
Exchange of Hong Kong Limited (“Stock Exchange”) on 30 December 2013 (the “Listing”).
The immediate and ultimate holding company of the Company is Victrad Enterprise (Pte) Ltd (“Victrad”),
which is a company incorporated in Singapore with limited liability.
2.
BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”, which include all International Financial Reporting Standards, International Accounting
Standards (“IASs”) and Interpretations) issued by the International Accounting Standards Board (the “IASB”)
and the disclosure requirements of the Companies Ordinance.
They have been prepared under the historical cost convention. These financial statements are presented
in Singapore dollars (“S$”).
Basis of presentation
In preparation for the Listing, the Group has undergone a reorganisation (“Reorganisation”), as explained
in the section headed “History and development” in the listing document of the Company dated 16
December 2013 (the “Prospectus”). Pursuant to the Reorganisation, the Company became the holding
company of the companies now comprising the Group on 29 June 2013.
As the Reorganisation is undertaken to incorporate the Company as an intermediate holding company,
the Group is a continuation of the existing group. The companies now comprising the Group were under
common control of the controlling shareholder, Victrad, before and after the Reorganisation. Accordingly,
the financial statements of the Group have been prepared by applying the principles of merger accounting
as if the Reorganisation had been completed at the beginning of the reporting period.
The consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows have been prepared as if the current group
structure had been in existence throughout the reporting period. No adjustments are made to reflect fair
values, or recognise any new assets or liabilities as a result of the Reorganisation.
32
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
2.
BASIS OF PREPARATION (Continued)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiary
for the year ended 30 June 2014. The financial statements of the subsidiary used in the preparation of
the consolidated financial statements are prepared for the same reporting date as the Company. Consistent
accounting policies are applied to like transactions and events in similar circumstances.
As explained above, the acquisition of the subsidiary under common control has been accounted for using
the merger accounting.
The merger accounting involves incorporating the financial statement items of the consolidating entities
or businesses in which the common control consolidation occurs as if they had been consolidated from
the date when the consolidating entities or businesses first came under the control of the controlling
party. The net assets of the consolidating entities or businesses are consolidated using the existing book
value. No amount is recognised in respect of goodwill or the excess of the acquirers’ interest in the net
fair value of acquirees’ identifiable assets, liabilities and contingent liabilities over the cost of investment
at the time of common control consolidation.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control described in the accounting policy for
subsidiaries below. A change in the ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities
of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation
differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair
value of any investment retained and (iii) any resulting surplus or deficit in the statement of profit or loss
and other comprehensive income. The Group’s share of components previously recognised in other
comprehensive income is reclassified to profit or loss or retained earnings, as appropriate, on the same
basis as would be required if the Group had directly disposed of the related assets or liabilities.
Kingbo Strike Limited Annual Report 2013/2014
33
Notes to Financial Statements
(Continued)
30 June 2014
3.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The Group has adopted the following new and revised IFRSs for the first time for the current year’s
financial statements:
Amendments to IFRS 1
Amendments to IFRS 7
IFRS 10
IAS 27 (Revised)
IFRS 11
IAS 28 (Revised)
IFRS 12
IFRS 13
IAS 19 (Revised)
First-time Adoption of International Financial Reporting Standards
Disclosures: Offsetting Financial Assets and Financial Liabilities
Consolidated Financial Statements
Separate Financial Statements
Joint Arrangements
Investments in Associates and Joint Ventures
Disclosure of Interests in Other Entities
Fair Value Measurement
Employee Benefits
The principal effects of adopting these new and revised IFRSs are as follows:
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards
Amendments to IFRS1 are effective for financial periods beginning on or after 1 January 2013.
The IFRS 1 Amendments change the grouping of items presented in other comprehensive income (“OCI”).
Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example,
exchange differences on translation of foreign operations, net movement on cash flow hedges and net
loss or gain on available-for-sale financial assets) are presented separately from items which will never be
reclassified (for example, the revaluation of land and buildings). The amendments have affected the
presentation only and have had no impact on the financial position or performance of the Group. In
addition, the Group has chosen to use the new title “statement of profit or loss” as introduced by the
amendments in these financial statements.
Amendments to IFRS 7 Disclosures: Offsetting Financial Assets and Financial Liabilities
Amendments to IFRS 7 Disclosures: Offsetting Financial Assets and is effective for financial periods
beginning on or after 1 January 2013 and interim periods with those annual periods. The required
disclosures should be provided retrospectively.
The Amendments to IFRS 7 provides disclosure requirements that are intended to help investors and other
financial statement users to better assess the effect or potential effect of offsetting arrangements on a
company’s financial position. The new disclosures require information about the gross amount if financial
assets and liabilities before offsetting and the amounts set off in accordance with the offsetting model
in IAS 32. As this is a disclosure standard, it will have no impact to the financial position and financial
performance of the Group when implemented during the year.
IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements (Revised)
IFRS 10 and the revised IAS 27 are effective for financial periods beginning on or after 1 January 2013.
IFRS 10 establishes a single control model that applies to all entities (including special purpose entities).
The changes introduced by IFRS 10 will require management to exercise significant judgment to determine
which entities are controlled, and therefore are required to be consolidated by the Group, compared with
the requirements that were in IAS 27. Therefore, IFRS10 may change which entities are consolidated within
a group. The revised IAS 27 was amended to address accounting for subsidiaries, jointly controlled entities
and associates in separate financial statements.
34
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
3.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
IFRS 11 Joint Arrangements and IAS 28 Investments in Associates and Joint Ventures (Revised)
IFRS 11 and the revised FRS 28 are effective for financial periods beginning on or after 1 January 2013.
IFRS 11 classifies joint arrangements either as joint operations or joint ventures. Joint operation is a joint
arrangement whereby the parties that have rights to the assets and obligations for the liabilities whereas
joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. IFRS 11 requires the determination of joint arrangement’s
classification to be based on the parties’ rights and obligations under the arrangement, with the existence
of a separate legal vehicle no longer being the key factor. IFRS 11 disallows proportionate consolidation
and requires joint ventures to be accounted for using the equity method. The revised IAS 28 was amended
to describe the application of equity method to investments in joint ventures in addition to associates.
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 is effective for financial periods beginning on or after 1 January 2013.
IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other
entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet
vehicles. IFRS 12 requires an entity to disclose information that helps users of its financial statements to
evaluate the nature and risks associated with its interests in other entities and the effects of those interests
on its financial statements. The Group is currently determining the impact of the disclosure requirements.
Details of the disclosures for subsidiaries, joint ventures and associates are included in notes 15 and 16
to the financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 is effective for financial periods beginning on or after 1 January 2013.
IFRS 13 provides a single source of guidance for all fair value measurements. IFRS 13 does not change
when an entity is required to use fair value, but rather provides guidance on how to measure fair value
under IFRS when fair value is required or permitted by IFRS.
IAS 19 Employee Benefits (Revised)
The revised IAS 19 Employee Benefits is effective for financial periods beginning on or after 1 January
2013.
The revised IAS 19 removes the corridor mechanism for defined benefit plans and no longer allows actuarial
gains and losses to be recognised in profit or loss. The distinction between short-term and long-term
employee benefits is based on expected timing of settlement rather than employee entitlement. The revised
IAS 19 is to be applied retrospectively.
Kingbo Strike Limited Annual Report 2013/2014
35
Notes to Financial Statements
(Continued)
30 June 2014
4.
IMPACT OF ISSUED BUT NOT YET EFFECTIVE IFRSs
The Group has not applied the following IFRSs that have been issued but are not yet effective in the
financial statements:
Effective date
(annual periods
beginning
on or after)
Amendments to IAS 32 — Offsetting Financial Assets and Financial Liabilities
Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12
Disclosure of Interests in Other Entities and IAS 27 Separate Financial
Statements — Investment Entities
Amendments to IAS 36 Recoverable Amount Disclosures for Non-financial
Assets
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
Annual improvements to IFRS 2010 — 2012 cycle
Annual improvements to IFRS 2011 — 2013 cycle
IFRS 9 Financial Instruments
1 January 2014
1 January 2014
1 January 2014
1 July 2014
1 July 2014
1 July 2014
1 January 2018 with
early adoption
permitted
Further information about those IFRSs that are expected to be applicable to the Group is as follows:
Amendments to IAS 32: Offsetting Financial Assets and Liabilities
Amendments to IAS 32: Offsetting Financial Assets and Liabilities are effective for financial periods
beginning on or after 1 January 2014. The amendments are to be applied retrospectively.
The Amendments to IAS 32 clarifies the meaning of ‘currently has a legally enforceable right of set-off’;
and that some gross settlement systems may be considered equivalent to net settlement. The Group does
not expect the adoption of this standard to have material impact to the financial statements.
Investment Entities — Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12
Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements
Investment Entities — Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of
Interests in Other Entities and IAS 27 Separate Financial Statements is effective for financial periods
beginning on or after 1 January 2014. The amendments to IFRS are to be applied retrospectively.
Investment entity is defined in IFRS 10 as an entity whose business purpose is to invest funds solely for
returns from capital appreciation, investment income or both and that the investment entity must also
evaluate the performance of its investments on a fair value basis. The amendments provide exception to
the consolidation requirement under IFRS 10 Consolidated Financial Statements for entities that meet the
definition of an investment entity. The exception to consolidation requires investment entities to account
for subsidiaries at fair value through profit or loss in accordance with IAS 39: Financial Instruments:
Recognition and Measurement or IFRS 9 Financial Instruments.
The Group does not expect the adoption of the above amendments to IFRS to have material impact to
the financial statements.
36
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
4.
IMPACT OF ISSUED BUT NOT YET EFFECTIVE IFRSs (Continued)
IFRS 9 Financial Instruments
IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to
classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual
periods beginning on or after 1 January 2018 with early adoption permitted. In subsequent phases, the
IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition.
The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of
the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases,
when issued, to present a comprehensive picture..
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Subsidiaries
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee (i.e.,
existing rights that give the Group the current ability to direct the relevant activities of the investee).
When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has power over
an investee, including:
(a)
the contractual arrangement with the other vote holders of the investee;
(b)
rights arising from other contractual arrangements; and
(c)
the Group’s voting rights and potential voting rights.
The results of a subsidiary are included in the Company’s statement of profit or loss and other
comprehensive income to the extent of dividends received and receivable. The Company’s investment in
subsidiaries that is not classified as held for sale in accordance with IFRS 5 is stated at cost less any
impairment losses.
Investments in associates and joint venture
An associate is an entity in which the Group has a long term interest of generally not less than 20% of
the equity voting rights and over which it is in a position to exercise significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the investee, but
is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
The Group’s investments in associates and joint venture are stated in the consolidated statement of financial
position at the Group’s share of net assets under the equity method of accounting, less any impairment
losses.
Kingbo Strike Limited Annual Report 2013/2014
37
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates and joint venture (Continued)
The Group’s share of the post-acquisition results and other comprehensive income of associates and joint
venture is included in the consolidated statement of profit or loss and other comprehensive income. In
addition, when there has been a change recognised directly in the equity of the associate or joint venture,
the Group recognises its share of any changes, when applicable, in the consolidated statement of changes
in equity. Unrealised gains and losses resulting from transactions between the Group and its associates
or joint venture are eliminated to the extent of the Group’s investments in the associates or joint venture,
except where unrealised losses provide evidence of an impairment of the asset transferred. Goodwill arising
from the acquisition of associates or joint venture is included as part of the Group’s investments in
associates or joint venture.
If an investment in an associate becomes an investment in a joint venture or vice versa, the retained
interest is not remeasured. Instead, the investment continues to be accounted for under the equity method.
In all other cases, upon loss of significant influence over the associate or joint control over the joint
venture, the Group measures and recognises any retained investment at its fair value. Any difference
between the carrying amount of the associate or joint venture upon loss of significant influence or joint
control and the fair value of the retained investment and proceeds from disposal is recognised in profit
or loss.
The results of associates and joint venture are included in the Company’s statement of profit or loss and
other comprehensive income to the extent of dividends received and receivable. The Company’s investments
in associates and joint venture are treated as non-current assets and are stated at cost less any impairment
losses.
When an investment in an associate or a joint venture is classified as held for sale, it is accounted for in
accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
Operating leases
Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
accounted for as operating leases. Where the Group is the lessee, rentals payable under operating leases
net of any incentives received from the lessor are charged to the statement of profit or loss and other
comprehensive income on the straight-line basis over the lease terms.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required,
the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s
or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets, in which case the recoverable amount is determined for the cashgenerating unit to which the asset belongs.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. An impairment loss is charged to the statement of profit or loss and other
comprehensive income in the period in which it arises in those expense categories consistent with the
function of the impaired asset.
38
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of non-financial assets (Continued)
An assessment is made at the end of each reporting period as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such an indication
exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other
than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable
amount of that asset, but not to an amount higher than the carrying amount that would have been
determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset
in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss and
other comprehensive income in the period in which it arises, unless the asset is carried at a revalued
amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant
accounting policy for that revalued asset.
Related parties
A party is considered to be related to the Group if:
(a)
(b)
the party is a person or a close member of that person’s family and that person
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
or
the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or
fellow subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third
entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group
or an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a); and
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
Kingbo Strike Limited Annual Report 2013/2014
39
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Plant and equipment and depreciation
Plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost
of an item of plant and equipment comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition and location for its intended use.
Expenditure incurred after items of plant and equipment have been put into operation, such as repairs
and maintenance, is normally charged to the statement of profit or loss and other comprehensive income
in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure
for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant
parts of plant and equipment are required to be replaced at intervals, the Group recognises such parts
as individual assets with specific useful lives and depreciates them accordingly.
Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over
the estimated useful life of the asset as follows:
Computer
Motor vehicles
Office and site equipment
—
—
—
3 years
6 years
8 years
Where parts of an item of plant and equipment have different useful lives, the cost of that item is allocated
on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful
lives and the depreciation method are reviewed, and adjusted if appropriate, at least at the end of each
reporting period.
An item of plant and equipment and any significant part initially recognised is derecognised upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognised in the statement of profit or loss and other comprehensive income in the year
the asset is derecognised is the difference between the net sales proceeds and the carrying amount of
the relevant asset.
Investments and other financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition as financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments and available-for-sale financial investments, or as
derivatives designated as hedging instruments in an effective hedge, as appropriate. When financial assets
are recognised initially, they are measured at fair value, plus transaction costs that are attributable to the
acquisition of the financial assets, except in the case of financial assets recorded at fair value through
profit or loss.
All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date
that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or
sales of financial assets that require delivery of assets within the period generally established by regulation
or convention in the marketplace.
The Group’s financial assets include cash and cash equivalents and trade and other receivables, which are
classified as loans and receivables.
40
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments and other financial assets (Continued)
Subsequent measurement of loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement, such assets are subsequently measured at amortised
cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated
by taking into account any discount or premium on acquisition and includes fees or costs that are an
integral part of the effective interest rate. The effective interest rate amortisation is included in the profit
or loss. The loss arising from impairment is recognised in the statement of profit or loss and other
comprehensive income in “Other operating expenses”.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial
position) when:
•
the rights to receive cash flows from the asset have expired; or
•
the Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, and has neither transferred nor retained substantially all the risks and rewards of
the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to
the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a
financial asset or a group of financial assets is impaired. An impairment exists if one or more events that
occurred after the initial recognition of the asset have an impact on the estimated future cash flows of
the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment
may include indications that a debtor or a group of debtors is experiencing significant financial difficulty,
default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or
other financial reorganisation and observable data indicating that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence
of impairment exists individually for financial assets that are individually significant, or collectively for
financial assets that are not individually significant. If the Group determines that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, it includes the
asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or
continues to be, recognised are not included in a collective assessment of impairment.
Kingbo Strike Limited Annual Report 2013/2014
41
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of financial assets (Continued)
The amount of any impairment loss identified is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not
yet been incurred). The present value of the estimated future cash flows is discounted at the financial
asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition).
The carrying amount of the asset is reduced through the use of an allowance account and the amount
of the loss is recognised in the statement of profit or loss and other comprehensive income. Interest
income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest
used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and
receivables together with any associated allowance are written off when there is no realistic prospect of
future recovery.
If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because
of an event occurring after the impairment was recognised, the previously recognised impairment loss is
increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the
recovery is credited to the statement of profit or loss and other comprehensive income.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified at initial recognition as loans and borrowings, or as derivatives designated
as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of
directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables.
Subsequent measurement of loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost, using the effective interest rate method unless the effect of discounting would be immaterial, in
which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised as well as through the effective interest
rate method amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the effective interest rate. The effective interest rate amortisation is
included in finance costs in the statement of profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and a recognition of a new liability, and the difference
between the respective carrying amounts is recognised in the statement of profit or loss and other
comprehensive income.
42
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statements of financial position if, and only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle
the liabilities simultaneously.
Inventories
Inventories are valued at the lower of cost and net realisable value. Inventories of the Group comprise
raw materials. Cost is based on a first in, first out basis and includes all costs in bringing the inventories
to its present location and condition. Net realisable value is based on estimated selling prices less any
estimated costs to be incurred to completion and disposal.
Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash
on hand and at banks that are readily convertible into known amounts of cash, are subject to an
insignificant risk of changes in value, and have a short maturity of generally within three months when
acquired.
For the purpose of the consolidated statements of financial position, cash and cash equivalents comprise
cash on hand and at banks, including term deposits, which are not restricted as to use.
Contract revenue and costs
When the outcome of a construction contract can be estimated reliably, contract revenue and contract
costs are recognised as revenue and expenses respectively by reference to the state of completion of the
contract activity at the end of the reporting period (“percentage of completion method”).
The outcome of a construction contract can be estimated reliably when: (i) total contract revenue can be
measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to
the entity; (iii) both the costs to complete the contract and the stage of completion can be measured
reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured
reliably so that actual contract costs incurred can be compared with prior estimates.
When the outcome of a construction contract cannot be estimated reliably (principally during early stages
of a contract), contract revenue is recognised only to the extent of contract costs incurred that are likely
to be recoverable and contract costs are recognised as expense in the period in which they are incurred.
An expected loss on the construction contract is recognised as an expense immediately when it is probable
that total contract costs will exceed total contract revenue.
In applying the percentage of completion method, the stage of completion is measured by reference to
the actual value of work done to-date based on physical completion to the proportion of total contract
revenue (as defined below).
Contract revenue — Contract revenue corresponds to the initial amount of revenue agreed in the contract
and any variations in contract work, claims and incentive payments to the extent that it is probable that
they will result in revenue; and they are capable of being reliably measured.
Kingbo Strike Limited Annual Report 2013/2014
43
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contract revenue and costs (Continued)
Contract costs — Contract costs include costs that relate directly to the specific contract and costs that
are attributable to contract activity in general and can be allocated to the contract. Costs that relate
directly to a specific contract comprise: subcontracting fees; site labour costs (including site supervision);
costs of materials used in construction and depreciation of equipment used on the contract that is directly
related to the contract.
At the end of the reporting period, the cumulative costs incurred plus recognised profits (less recognised
losses) on each contract is compared against the progress billings. Where the cumulative costs incurred
plus the recognised profits (less recognised losses) exceed progress billings, the balance is presented as a
gross amount due from customers for contract work in progress. Where progress billings exceed the
cumulative costs incurred plus recognised profits (less recognised losses), the balance is presented as a
gross amount due to customers for contract work in progress.
Progress billings not yet paid by customers and retentions by customers are included within “trade and
other receivables”.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured
at the fair value of consideration received or receivable, taking into account contractually defined terms
of payment and excluding taxes or duty. The following specific recognition criteria must also be met before
revenue is recognised:
(a) Contract revenue
Revenue from the rendering of electrical engineering services is recognised by reference to the stage
of completion of the contract activity at year end (the percentage of completion method).
Please refer to “Contract revenue and costs” above for details on the accounting policy on contract
revenue.
(b) Sale of goods
Revenue from the sale of goods is recognised upon the transfer of significant risk and rewards of
ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised
to the extent where there are significant uncertainties regarding the recovery of the consideration
due, associated costs or the possible return of goods.
(c)
Interest income
Interest income is recognised using the effective interest method.
(d) Dividend income
Dividend income is recognised when the shareholders’ right to receive payment is established.
44
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or
loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.
(a) Current income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period, taking into
consideration interpretations and practices prevailing in the countries in which the Group operates.
Current income taxes are recognised in profit or loss except to the extent that the tax related to
items recognised outside profit or loss, either in other comprehensive income or directly in equity.
Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the end of the
reporting period between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
•
where the deferred tax arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
•
in respect of taxable temporary differences associated with investment in a subsidiary, where
the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised, except:
•
where the deferred tax asset relating to the deductible temporary differences arises from the
initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss; and
•
in respect of deductible temporary differences associated with investment in a subsidiary,
deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
Kingbo Strike Limited Annual Report 2013/2014
45
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes (Continued)
(b) Deferred tax (Continued)
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at the end of each reporting period and are recognised to the extent that it has become
probable that future taxable profit will be available to allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
financial year when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the end of each reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
recognition at that date, would be recognised subsequently if new information about facts and
circumstances changed. The adjustment would be recognised in profit or loss.
(c)
Goods and services tax (“GST”)
Revenues, expenses and assets are recognised net of the amount of GST, except:
•
where the GST incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable; and
•
receivables and payables that are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the consolidated statement of financial position.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant
will be received and all attaching conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended
to compensate, are expensed.
46
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Employee benefits
(a) Defined contribution plans
The Group makes contributions to the Central Provident Fund (“CPF”) scheme in Singapore, a defined
contribution pension scheme. These contributions are recognised as an expense in the period in
which the related service is performed.
(b) Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they accrue to employees.
A provision is made for the estimated liability for leave as a result of services rendered by employees
up to the end of the reporting period.
Segment reporting
The Group is principally engaged in the provision of electrical engineering services. Information reported
of the Group’s management for the purpose of resources allocation and performance assessment focuses
on the operating results of the Group as a whole as the Group’s resources are integrated and no discrete
operating segment financial information is available. Accordingly, no operating segment information is
presented.
All revenue, operating expenses and assets and liabilities are derived from the operations in Singapore.
Dividends
Final dividends proposed by the Directors are classified as a separate allocation of retained earnings within
the equity section of the consolidated statements of financial position, until they have been approved by
the shareholders in a general meeting. When these dividends have been approved by the shareholders
and declared, they are recognised as a liability.
Foreign currencies
The financial statements are presented in Singapore Dollars (S$), which the Company adopts as its
functional currency and the presentation currency of the Group. Each entity in the Group determines its
own functional currency and items included in the financial statements of each entity are measured using
that functional currency. Foreign currency transactions recorded by the entities in the Group are initially
recorded using their respective functional currency rates prevailing at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
rates of exchange ruling at the end of the reporting period. All differences are recognised in profit or
loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value was
determined.
Kingbo Strike Limited Annual Report 2013/2014
47
Notes to Financial Statements
(Continued)
30 June 2014
6.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their
accompanying disclosures. However, uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability affected
in the future periods.
Judgements
In the process of applying the Group’s accounting policies, management has made the following
judgements, apart from those involving estimations, which have the most significant effect on the amounts
recognised in the financial statements:
(a) Impairment of non-financial assets
The Group assesses at each reporting date whether there are any indicators of impairment for all
non-financial assets, including its plant and equipment and its interests in joint venture and associates
at each reporting date. To determine whether there is any objective evidence of impairment, the
Company considers external factors including decline in asset values, significant changes with an
adverse effect in the market or economic or legal environment in which the entity operates and
internal factors such as evidence from internal reporting.
Non-financial assets are tested for impairment when there are indicators that the carrying amounts
may not be recoverable.
(b) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired. To determine whether there is objective evidence of impairment, the Group
considers factors such as the probability of insolvency or significant financial difficulties of the debtor
and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics.
(c)
Interest in a joint venture
The Group holds a 50% equity interest in the joint venture. The Group does not have unilateral
control over this entity. However, the Group has joint control since there are only two shareholders
in the entity and all major decisions have to be jointly agreed by the two shareholders. Based on
the facts and circumstances, management concluded that the Group has joint control over the entity.
(d) Interests in associates
The Group holds a 50% equity interest in each of the associates. The Group does not have unilateral
control over these entities. The Group does not have joint control as well since there are more than
two shareholders in each of the associates. Based on the facts and circumstances, management
concluded that the Group does not have unilateral or joint control but is in a position to exercise
significant influence on the associates.
48
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
6.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of each reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
Construction contracts
The Group recognises contract revenue and contract costs by reference to the stage of completion of the
contract activity at the end of each reporting period, when the outcome of a construction contract can
be estimated reliably. The stage of completion is measured by reference to the proportion that the value
of work done to-date based on physical completion to the total contract value.
Significant assumptions are required to estimate the total budgeted contract costs and the recoverable
variation works. In making these estimates, management has relied on past experience and knowledge of
the project engineers. The carrying amounts of assets and liabilities arising from construction contracts at
the end of the reporting period are disclosed in note 18 to the financial statements.
If the estimated total construction cost increases/decreases by 10% from management’s estimates, the
Group’s net profit after tax will be approximately S$1,122,000 (2013: S$861,000) lower/higher.
7.REVENUE
Revenue, which is also the Group’s turnover, represents an appropriate proportion of contract revenue of
construction contracts; the net invoiced value of goods sold, after allowances for returns and trade
discounts during the year.
Contract revenue
Sale of goods
2014
S$
2013
S$
22,628,298
—
18,628,674
31,834
22,628,298
18,660,508
Information about major customers
There are 2 (2013: 3) customers who individually contributed more than 10% of the Group’s revenue.
Revenue with these customers amounted to S$11,041,000 (2013: S$2,516,000) and S$9,423,000 (2013:
S$13,463,000) respectively.
8.
OTHER OPERATING INCOME
Bank interest income
Incentives from the Singapore Government
2014
S$
2013
S$
7,296
44,151
26,598
18,915
51,447
45,513
Kingbo Strike Limited Annual Report 2013/2014
49
Notes to Financial Statements
(Continued)
30 June 2014
8.
OTHER OPERATING INCOME (Continued)
Incentives from the Singapore Government comprise Special Employment Credit, Wage Credit Scheme and
Productivity and Innovation Credit Bonus. There are no unfulfilled conditions or contingencies relating to
these incentives.
9.
FINANCE COSTS
An analysis of finance costs is as follows:
Bank charges
2014
S$
2013
S$
2,568
620
2014
S$
2013
S$
135,480
41,217
4,759
13,515,642
—
293,468
3,059,271
102,164
135,938
1,500,512
111,000
40,800
—
10,336,319
40,610
143,352
2,703,738
—
—
420,760
37,917
2,841,298
180,056
—
2,556,027
147,711
3,059,271
2,703,738
10. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging:
Notes
(a)Auditors’ remuneration
Depreciation of plant and equipment
Loss on plant and equipment written off
Cost of services provided
Cost of goods sold
Minimum lease payments under operating leases
Employee benefits (note b)
Legal and professional expense
Foreign exchange differences
Listing expenses
(b)Employee benefits (including directors’
remuneration):
— Directors’ fees
— Salaries, wages and bonuses
— CPF contributions
50
Kingbo Strike Limited Annual Report 2013/2014
17
17
Notes to Financial Statements
(Continued)
30 June 2014
11. DIRECTORS, CHIEF EXECUTIVE AND FIVE HIGHEST PAID EMPLOYEES’ REMUNERATION
(a) Executive directors, independent non-executive directors and the Chief Executive
Directors’ and the Chief Executive’s remuneration, disclosed pursuant to the Rules Governing the
Listing of Securities on the Stock Exchange (the “Listing Rules”) and Section 161 of the Companies
Ordinance, is as follows:
Fees
Other remuneration:
— Salaries and bonuses
— CPF contributions
(i)
2014
S$
2013
S$
37,917
—
435,000
20,825
414,000
20,475
493,742
434,475
Independent non-executive directors
The fees paid to independent non-executive directors during the year are as follows:
Year ended 30 June 2014
Wong Siew Chuan
Ng Tiow Swee
Chen Jianyuan, Edwin
Fees
S$
Salaries
and
bonuses
S$
CPF
contributions
S$
Total
S$
14,583
11,667
11,667
—
—
—
—
—
—
14,583
11,667
11,667
37,917
—
—
37,917
There were no other emoluments payable to the independent non-executive directors during
the year (2013: Nil).
As at 30 June 2013, no independent non-executive directors had been appointed by the
Company.
Kingbo Strike Limited Annual Report 2013/2014
51
Notes to Financial Statements
(Continued)
30 June 2014
11.DIRECTORS, CHIEF EXECUTIVE AND FIVE HIGHEST PAID EMPLOYEES’ REMUNERATION
(Continued)
(a)Executive directors, independent non-executive directors and the Chief Executive
(Continued)
(ii)
Executive directors
In respect of individuals, who acted as executive directors of the Company, the remuneration
received or receivable from the Group during each of the year is as follows:
Year ended 30 June 2014
Yeo Jiew Yew
(Managing Director)
Sim Yew Heng
Year ended 30 June 2013
Yeo Jiew Yew
(Managing Director)
Sim Yew Heng
Fees
S$
Salaries
and
bonuses
S$
CPF
contributions
S$
Total
S$
—
—
210,000
225,000
8,925
11,900
218,925
236,900
—
435,000
20,825
455,825
—
210,000
204,000
8,775
11,700
218,775
215,700
—
414,000
20,475
434,475
(b) Five highest paid employees
The five highest paid employees of the Group during the year are as follows:
Directors (including Managing Director)
Non-director employees
Details of the remuneration of the directors are set out in (a) above.
52
Kingbo Strike Limited Annual Report 2013/2014
2014
2013
2
3
2
3
5
5
Notes to Financial Statements
(Continued)
30 June 2014
11.DIRECTORS, CHIEF EXECUTIVE AND FIVE HIGHEST PAID EMPLOYEES’ REMUNERATION
(Continued)
(b) Five highest paid employees (Continued)
Details of the remuneration of the highest paid employees, who are neither a director nor the
Managing Director of the Company, are as follows:
Salaries and bonuses
CPF contributions
2014
S$
2013
S$
283,150
31,737
212,450
27,520
314,887
239,970
The number of non-director, highest paid employees whose remuneration fell within the following
band is as follows:
Nil to HK$1,000,000
2014
2013
3
3
During the year, no emoluments (2013: Nil) were paid by the Group to any of the persons who are
directors (including Managing Director) of the Company, or the five highest paid individuals as an
inducement to join or upon joining the Group or as compensation for loss of office. None of the
directors or the five highest paid individuals (2013: Nil) has waived any remuneration during the
year.
12. INCOME TAX EXPENSE
The major components of income tax expense for the year are as follows:
2014
S$
2013
S$
—
—
Current — Hong Kong
Current — Elsewhere:
— Charge for the year
— Over provision in respect of previous years
Deferred
1,296,011
(16,783)
(3,190)
1,190,632
(8,977)
19,398
Total tax charge for the year
1,276,038
1,201,053
Kingbo Strike Limited Annual Report 2013/2014
53
Notes to Financial Statements
(Continued)
30 June 2014
12. INCOME TAX EXPENSE (Continued)
Relationship between tax expense and accounting profit
A reconciliation of the tax expense applicable to profit before tax at the applicable statutory tax rates for
the countries in which the Company and the subsidiary are domiciled to the tax expense at the effective
tax rates, and a reconciliation of the applicable rates (i.e., the statutory tax rates) to the effective tax rates
for the year, are as follows:
2014
S$
%
8,901,289
Taxation at statutory tax rate
1,513,219
%
Cayman
Islands
Singapore
Profit/(loss) before tax
S$
—
%
Total
(1,877,982)
17.0
S$
7,023,307
—
1,513,219
21.5
Adjustments:
Non-deductible expenses
Effects of partial tax exemption and tax relief
Over provision in respect of previous years
Share of results of a joint venture and associates
Over provision of deferred tax liability
Income tax expense recognised in profit or loss
13,402
0.1
—
—
13,402
0.1
(73,192)
(0.8)
—
—
(73,192)
(1.0)
(16,783)
(0.2)
—
—
(16,783)
(0.2)
(157,418)
(1.8)
—
—
(157,418)
(2.2)
—
—
—
(3,190)
1,276,038
14.3
—
—
1,276,038
18.2
S$
%
S$
%
S$
%
(3,190)
—
2013
Singapore
Cayman
Islands
Total
Profit/(loss) before tax
8,163,383
(420,760)
7,742,623
Taxation at statutory tax rate
1,387,775
17.0
—
—
1,387,775
17.9
Adjustments:
Non-deductible expenses
11,897
0.1
—
—
11,897
0.1
Effects of partial tax exemption and tax relief
(69,307)
(0.8)
—
—
(69,307)
(0.9)
Over provision in respect of previous years
Share of results of a joint venture and associates
Others
Income tax expense recognised in profit or loss
(8,977)
(0.1)
—
—
(8,977)
(0.1)
(119,154)
(1.5)
—
—
(119,154)
(1.5)
(1,181)
—
—
—
(1,181)
—
1,201,053
14.7
—
—
1,201,053
15.5
No Hong Kong profits tax has been provided (2013: Nil) since no assessable profit arose in Hong Kong
during the year.
The Company’s profit is not subject to any tax in its country of incorporation, the Cayman Islands. Income
tax expense for the Group relates wholly to the profits of the subsidiary which were taxed at a statutory
tax rate of 17% in Singapore.
The share of tax attributable to the joint venture and associates amounting to S$74,304 (2013: S$34,410)
is included in “share of results of a joint venture” and “share of results of associates” in the statement
of profit or loss and other comprehensive income respectively.
54
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
13.DIVIDENDS
2014
S$
2013
S$
—
8,154,000
—
8,154,000
Declared and paid during the year:
Dividends on ordinary shares:
— Interim exempt dividend (2013: S$5.40 per share)
No dividend was declared for the year. The dividends declared in the last financial year by Strike Electrical
Engineering Pte Ltd (“Strike Singapore”) to its shareholders were prior to the Reorganisation.
14. EARNINGS PER SHARE
The weighted average number of equity shares refers to shares in issue during the year. It has been
adjusted for the issuance of new ordinary shares and the sub-division of shares prior to the Listing as set
out in note 24. The basic earnings per share are based on the weighted average number of ordinary
shares outstanding during the year.
The Group had no potentially dilutive ordinary shares (2013: Nil) in issue during the year.
The calculations of basic and diluted earnings per share are based on:
2014
S$
2013
S$
Earnings
Profit attributable to equity holders of the Company, used in
the basic earnings per share calculations
5,747,269
6,541,570
Shares
Weighted average number of ordinary shares in issue during
the year used in the basic and diluted earnings per share
calculations
576,000,000
Basic and diluted earnings per share (S$ cents)
*
1.00
512,000,000*
1.28
The subdivision of shares and shares issued under the Capitalisation Issue set out in note 24 are deemed effective in 2013 for
the purpose of computation of the weighted average number of ordinary shares.
Kingbo Strike Limited Annual Report 2013/2014
55
Notes to Financial Statements
(Continued)
30 June 2014
15. INTEREST IN A JOINT VENTURE
Group
2014
S$
2013
S$
Unlisted shares, at cost
Share of post-acquisition reserves
125,000
1,211,357
125,000
711,427
Share of net assets
1,336,357
836,427
The Group amount due from the joint venture is disclosed in note 20 to the financial statements.
Particulars of the Group’s joint venture are as follows:
Percentage of
Name
Place of
registration
and business
YL Integrated Pte Ltd (“YL”)
Singapore
Ownership
interest
Voting
power
50
50
Profit
sharing Principal activity
50 Electrical works and mixed
construction activities
The Group’s shareholdings in the joint venture all comprise equity shares held through a wholly-owned
subsidiary of the Company.
YL, which is considered a material joint venture of the Group and is accounted for using the equity
method.
56
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
15. INTEREST IN A JOINT VENTURE (Continued)
The following table illustrates the summarised financial information of YL reconciled to the carrying amount
in the financial statements:
2014
2013
S$
S$
535,268
1,200,164
Other current assets
2,647,816
2,744,920
Current assets
3,183,084
3,945,084
713,586
689,652
Joint venture’s assets and liabilities:
Cash and cash equivalents
Non-current assets
Current liabilities
(831,625)
(2,567,254)
Non-current liabilities
(392,331)
(394,628)
Net assets
2,672,714
1,672,854
Reconciliation to the Group’s interest in the joint venture:
50%
50%
Carrying amount of the investment
1,336,357
836,427
Revenue
8,543,513
8,214,226
Profit and total comprehensive income for the year after
charging:
999,860
1,158,208
— Depreciation
(63,776)
(39,558)
— Income tax expense
(88,462)
(68,820)
Proportion of the Group’s ownership
Dividend received
*
—
125,000*
The joint venture had declared and paid final exempt dividend amounting to S$250,000 to its shareholders during last year. The
subsidiary of the Company had received dividend amounting to S$125,000 during last year.
Kingbo Strike Limited Annual Report 2013/2014
57
Notes to Financial Statements
(Continued)
30 June 2014
16. INTERESTS IN ASSOCIATES
Group
2014
S$
2013
S$
Unlisted shares, at cost
Share of post-acquisition reserves
200,000
649,705
200,000
223,646
Share of net assets
849,705
423,646
The Group’s amounts due from/to the associates are disclosed in notes 20 and 22 to the financial
statements.
Particulars of the principal associates are as follows:
Percentage of
Name
Place of
registration
and business
Ownership
interest
Voting
power
Profit
sharing Principal activity
NEK Electrical Engineering Pte Ltd
(“NEK”)
Singapore
50
50
50 Electrical works and mixed
construction activities
SRM Electrical Engineering Pte Ltd
(“SRM”)
Singapore
50
50
50 Electrical works and mixed
construction activities
The Group’s shareholdings in the associates all comprise equity shares held through a wholly-owned
subsidiary of the Company.
NEK is considered a material associate of the Group. It is engaged in the electrical works and mixed
construction activities and is accounted for using the equity method.
58
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
16. INTERESTS IN ASSOCIATES (Continued)
The following table illustrates the summarised financial information of NEK adjusted for any differences
in accounting policies, and reconciled to the carrying amount in the consolidated financial statements:
2014
S$
Current assets
Non-current assets
Current liabilities
Net assets
Reconciliation to the Group’s interest in the associate:
Proportion of the Group’s interest in the associate
Carrying amount of the investment
Revenue
Profit and total comprehensive income for the year
2013
S$
2,458,453
510,946
(1,911,671)
825,513
460,182
(706,923)
1,057,728
578,772
50%
528,864
50%
289,386
3,641,891
478,956
954,221
387,423
SRM is considered a material associate of the Group. It is engaged in the electrical works and mixed
construction activities and is accounted for using the equity method.
The following table illustrates the summarised financial information of SRM adjusted for any differences
in accounting policies, and reconciled to the carrying amount in the consolidated financial statements:
2014
S$
Current assets
Non-current assets
Current liabilities
Non-current liabilities
1,078,758
795,978
(41,093)
(1,191,961)
2013
S$
336,729
150,291
(11,274)
(207,226)
Net assets
641,682
268,520
Reconciliation to the Group’s interest in the associate:
Proportion of the Group’s interest in the associate
Carrying amount of the investment
50%
320,841
50%
134,260
6,455,217
373,162
5,097,700
4,417
Revenue
Profit and total comprehensive income for the year
Kingbo Strike Limited Annual Report 2013/2014
59
Notes to Financial Statements
(Continued)
30 June 2014
17. PLANT AND EQUIPMENT
Group
Computer
S$
Motor
vehicles
S$
Office and
site
equipment
S$
Total
S$
Group
Cost:
At 1 July 2012
Additions
46,783
4,109
168,768
—
57,043
18,200
272,594
22,309
At 30 June 2013 and 1 July 2013
Additions
Write-off
50,892
6,641
(33,435)
168,768
—
—
75,243
4,211
(10,583)
294,903
10,852
(44,018)
At 30 June 2014
24,098
168,768
68,871
261,737
Accumulated depreciation:
At 1 July 2012
Charge for the year
31,657
8,783
75,267
24,575
16,713
7,442
123,637
40,800
At 30 June 2013 and 1 July 2013
Charge for the year
Write-off
40,440
7,030
(32,645)
99,842
24,575
—
24,155
9,612
(6,614)
164,437
41,217
(39,259)
At 30 June 2014
14,825
124,417
27,153
166,395
9,273
44,351
41,718
95,342
10,452
68,926
51,088
130,466
Net carrying values:
At 30 June 2014
At 30 June 2013
60
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
18. GROSS AMOUNT DUE FROM CUSTOMERS FOR CONTRACT WORK IN PROGRESS
Group
2014
S$
Aggregate amount of costs incurred and recognised profits
(less recognised losses) to date
Less: Progress billings
Presented as:
Gross amount due from customers for contract work in
progress
2013
S$
78,742,630
(76,098,445)
91,081,376
(84,225,973)
2,644,185
6,855,403
2,644,185
6,855,403
As at 30 June 2014 and 2013, there were no advances received from customers for contract work in
progress.
19.INVENTORIES
Group
2014
S$
Raw materials, at cost
43,809
2013
S$
57,694
Raw materials relate mainly to electrical cables, switchboards and light fittings.
Kingbo Strike Limited Annual Report 2013/2014
61
Notes to Financial Statements
(Continued)
30 June 2014
20. TRADE AND OTHER RECEIVABLES
Group
2014
S$
2013
S$
Trade receivables (non-current):
Retention sum receivables
2,377,461
1,207,500
655,856
—
—
894,977
1,172,184
6,680
6,578
1,605,535
1,550,833
2,790,977
7,500
59,850
1,500
29,700
—
12
67,350
31,212
1,618,183
2,822,189
Trade receivables:
Third parties
Amount due from a joint venture
Amount due from associates
Retention sum receivables
Other receivables:
Advances to staff
Deposits
Amount due from the immediate and ultimate holding
company
Total trade and other receivables (current)
Retention sum receivables refer to retention sum which will be partially billed upon the practical completion
of the Group’s projects, and the balance shall be billed upon the final completion of the Group’s projects.
Retention sum receivables are non-interest bearing and on terms based on the respective contracts’
retention periods.
Trade receivables
Trade receivables (excluding retention sum receivables) are non-interest bearing and are generally on terms
of 30 to 90 days.
An aging analysis of the trade receivables (excluding retention sum receivables) as at the end of the year,
based on the invoice date, is as follows:
Less than 30 days
30 to 60 days
More than 61 days
62
Kingbo Strike Limited Annual Report 2013/2014
2014
S$
2013
S$
640,307
11,235
4,314
1,161,350
—
24,092
655,856
1,185,442
Notes to Financial Statements
(Continued)
30 June 2014
20. TRADE AND OTHER RECEIVABLES (Continued)
Trade receivables (Continued)
As at 30 June 2014 and 2013, the Group’s trade receivables were not impaired. The aging analysis of
the trade receivables (excluding retention sum receivables) that are neither individually nor collectively
considered to be impaired is as follows:
Neither past due nor impaired
Less than 30 days past due
More than 31 days and less than 60 days past due
More than 61 days past due
2014
S$
2013
S$
640,307
11,235
—
4,314
1,161,350
15,836
—
8,256
655,856
1,185,442
Receivables that were past due but not impaired relate to a number of customers that have a good track
record with the Group. Based on past experience, the Directors are of the opinion that no provision for
impairment is necessary in respect of these balances as there has not been a significant change in credit
quality of the customers and the balances are still considered to be fully recoverable. The Group does not
hold any collateral or other credit enhancements over these balances.
Amounts due from the joint venture, associates, and the immediate and ultimate holding
company
These amounts are unsecured, non-interest-bearing, and repayable upon demand and had been/are to be
settled in cash.
21. CASH AND CASH EQUIVALENTS
Group
2014
S$
Cash at banks and on hand
Short-term deposits
2013
S$
Company
2014
S$
2013
S$
10,251,791
8,000,219
3,513,730
3,735,645
7,377,356
—
—
—
18,252,010
7,249,375
7,377,356
—
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are
made for varying periods of between one day and three months, depending on the immediate cash
requirements of the Group, and earn interests at the respective short-term deposit rates.
As at 30 June 2013, short-term deposits amounting to S$3,735,645 are held in trust on behalf of the
Group by the directors. Such amounts have been transferred to the bank accounts of the Group on 22
July 2013.
Kingbo Strike Limited Annual Report 2013/2014
63
Notes to Financial Statements
(Continued)
30 June 2014
21. CASH AND CASH EQUIVALENTS (Continued)
Bank balances denominated in foreign currency as at 30 June are as follows:
Group
2014
S$
Hong Kong Dollars
7,377,356
2013
S$
—
Company
2014
S$
7,377,356
2013
S$
—
22. TRADE AND OTHER PAYABLES
Group
2014
S$
2013
S$
Company
2014
S$
2013
S$
Trade payables:
Third parties
Amounts due to associates
Amount due to the immediate and
ultimate holding company
Accruals for project costs
364,951
—
574,897
7,152
—
—
—
—
—
26,590
—
—
364,951
608,639
—
—
5,923,320
13,794,399
—
—
5,243
321,366
115,924
—
4,233
239,970
70,293
—
—
5,417
—
24,036
—
—
—
511,587
442,533
314,496
29,453
511,587
6,730,804
14,717,534
29,453
511,587
Other payables:
Sundry payables
Accrued liabilities
GST payable
Amount due to a subsidiary
Total
Accrued liabilities refer mainly to accrual for professional fees, trade purchases and employee benefits.
Trade payables/other payables
These amounts are non-interest bearing. Trade payables are normally settled on terms of 30 to 90 days
while other payables have an average term of 30 days.
64
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
22. TRADE AND OTHER PAYABLES (Continued)
Trade payables/other payables (Continued)
An aging analysis of the trade payables as at the end of the year, based on the invoice date, is as follows:
Group
2014
S$
Trade payables:
Less than 90 days
More than 90 days and less than 180 days
2013
S$
364,951
—
607,676
963
364,951
608,639
Amounts due to the associates and the immediate and ultimate holding company
These amounts are trade related, unsecured, non-interest bearing, repayable on demand and had been/
are to be settled in cash.
23. DEFERRED TAX LIABILITIES
Deferred tax liabilities as at the end of each of the year relate to the following:
Group
2014
S$
2013
S$
16,208
19,398
2014
S$
2013
S$
Authorised:
5,000,000,000 (2013: 300,000) ordinary shares of
HK$0.01 each (2013: HK$1.00 each)
8,067,769
48,880
Issued and fully paid:
640,000,000 (2013: 300,000) ordinary shares of
HK$0.01 each (2013: HK$1.00 each)
1,048,880
48,880
Differences in depreciation for tax purposes
24. SHARE CAPITAL AND SHARE PREMIUM
Shares
Kingbo Strike Limited Annual Report 2013/2014
65
Notes to Financial Statements
(Continued)
30 June 2014
24. SHARE CAPITAL AND SHARE PREMIUM (Continued)
Shares (Continued)
During the year, the movements in share capital and share premium were as follows:
Number of
shares in
issue
Notes
At 1 July 2012
Issued
share
capital
Share
premium
account
Total
S$
S$
S$
—
—
—
—
Issuance of new shares on incorporation
(a)
1
1
—
1
Issuance of shares on the Reorganisation
(b)
299,999
48,879
3,700,767
3,749,646
300,000
48,880
3,700,767
3,749,647
At 30 June 2013 and 1 July 2013
Subdivision of shares
(c)
29,700,000
—
—
—
Shares issued under the Capitalisation Issue
(e)
482,000,000
790,164
(790,164)
—
Issuance of share capital pursuant to IPO
(f)
128,000,000
209,836
10,281,967
10,491,803
Listing expenses taken against share premium
At 30 June 2014
—
—
(825,596)
(825,596)
128,000,000
209,836
9,456,371
9,666,207
640,000,000
1,048,880
12,366,974
13,415,854
Notes:
66
(a)
The authorised share capital of the Company on the date of its incorporation was HK$300,000 divided into 300,000 shares of
HK$1.00 each. On 19 June 2013, one nil-paid share of the Company was allotted and issued to Sharon Pierson as the initial
subscriber, which was transferred to Victrad on the same date.
(b)
On 29 June 2013, pursuant to a sale and purchase agreement entered into between the Company and Victrad, the Company
acquired all the issued shares of Strike Singapore from Victrad, in consideration of HK$23,013,833, which was satisfied by (i)
the allotment and issue of 299,999 shares of HK$1.00 each in the share capital of the Company by the Company to Victrad,
credited as fully paid; and (ii) the crediting of the one nil-paid share of the Company which was held by Victrad as fully paid.
(c)
On 9 December 2013, each authorised and issued share of a par value of HK$1.00 in the capital of the Company was subdivided into 100 shares of a par value of HK$0.01 each (the “Share Sub-division”). Upon completion of the Share Sub-division,
the authorised share capital of the Company was HK$300,000 divided into 30,000,000 shares of HK$0.01 each.
(d)
On 9 December 2013, the authorised share capital of the Company was increased from HK$300,000 divided into 30,000,000
shares of HK$0.01 each to HK$50,000,000 divided into 5,000,000,000 shares of HK$0.01 each by the creation of an additional
4,970,000,000 shares of HK$0.01 each which rank pari passu in all respects with the existing shares.
(e)
Pursuant to the written resolutions passed by the shareholder of the Company on 9 December 2013, conditional on the share
premium account of the Company being credited as a result of the initial public offering (“IPO”), the directors were authorised
to capitalise HK$4,820,000 standing to the credit of the share premium account of the Company by applying such sum in paying
up in full at par 482,000,000 shares for allotment and issue to the shareholders whose names appeared on the register of
members of the Company at 4:00 p.m. on 9 December 2013 (the “Capitalisation Issue”).
(f)
In connection with the Company’s IPO, 128,000,000 new shares and 32,000,000 existing shares of HK$0.01 each were offered
at a price of HK$0.5 per share. Dealings in these shares on the Stock Exchange commenced on 30 December 2013.
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
25.RESERVES
Group
Merger reserves
Merger reserves of the Group represent the capital contributions from the equity holders of the subsidiary,
Strike Singapore. The Group acquired Strike Singapore during 2013 from Victrad which was an acquisition
under common control and has been accounted for by applying the principle of merger accounting and
the merger reserves have been debited for the purchase consideration for Strike Singapore.
Company
Accumulated
losses
S$
At 19 June 2013 (date of incorporation)
Losses and total comprehensive loss for the period
—
420,760
At 30 June and 1 July 2013
Losses and total comprehensive loss for the year
420,760
1,877,982
At 30 June 2014
2,298,742
26. INVESTMENT IN A SUBSIDIARY
Company
2014
S$
3,749,647
Unlisted shares, at cost
2013
S$
3,749,647
Pursuant to the Reorganisation on 29 June 2013, the Company issued 300,000 ordinary shares of HK$1.00
each in consideration and in exchange for the entire issued share capital of the above subsidiary. Upon
completion of the Reorganisation, the subsidiary became wholly-owned by the Company.
Particulars of the subsidiary are as follows:
Place of incorporation/
registration and
business
Name
Nominal value
of issued and
paid-up capital
Percentage of
ownership interest
2014
2013
100
100
Principal activities
Directly held:
* Strike Electrical
Engineering Pte Ltd
(“Strike Singapore”)
*
Singapore
S$1,510,000
Electrical works and general
building engineering
services
Statutory financial statements prepared in accordance with Singapore Financial Reporting Standards are audited by Ernst & Young
LLP, Singapore.
Kingbo Strike Limited Annual Report 2013/2014
67
Notes to Financial Statements
(Continued)
30 June 2014
27. RELATED PARTY TRANSACTIONS
(I)
In addition to the related party information disclosed elsewhere in the financial statements, the
following are the significant related party transactions entered into between the Group and its
related parties that took place on terms and conditions agreed between the parties during the year:
Management fees charged by
— immediate and ultimate holding company
— joint venture
— associates
Sub-contractor fees charged by
— immediate and ultimate holding company
— joint venture
— associates
Project costs recharged by/(to)
— immediate and ultimate holding company
— joint venture
— associates
Progress billings raised on behalf by the
immediate and ultimate holding company
to customers
Operating expenses recharged by the
immediate and ultimate holding company
Rental expense charged by the immediate and
ultimate holding company
Management fees charged to
— joint venture
— associates
Sales of materials to
— joint venture
— associates
68
Kingbo Strike Limited Annual Report 2013/2014
Notes
2014
S$
2013
S$
(b)(i)
(b)(iv)
(b)(iv)
—
—
—
182,915
79,184
222,347
(b)(ii)
(a)(i)
(a)(i)
—
5,005,149
6,376,616
50,288
2,183,575
3,801,835
(b)(vii)
(b)(vii)
(b)(vii)
—
—
—
63,062
(75,102)
(62,097)
(b)(iii)
—
30,283
(a)(ii)
6,425
41,124
(a)(iii)
104,500
—
(b)(v)
(b)(v)
—
—
(3,663)
(20,842)
(b)(vi)
(b)(vi)
—
—
(19,262)
(12,572)
Notes to Financial Statements
(Continued)
30 June 2014
27. RELATED PARTY TRANSACTIONS (Continued)
(I)
(Continued)
(a)
Recurring
(i)
During the year, Strike Singapore had subcontracted some electrical engineering works
to the joint venture and associates. The amount subcontracted to the joint venture
constituted a continuing connected transaction as defined under Chapter 14A of the
Listing Rules. Details of the transaction have been set out in the section headed “Report
of the Directors” of this annual report.
(ii)
Operating expenses recharged by the immediate and ultimate holding company mainly
refer to the utilities and telephone charges for the office premises, and upkeep expense
on the motor vehicles which was paid on behalf by Victrad.
(iii) Rental expense was charged by the immediate and ultimate holding company with
reference to the rates of other similar premises. The immediate and ultimate holding
company, Victrad, being our controlling shareholder, is a connected person of our
Company. The rental expense paid to Victrad was less than HK$3 million (approximately
S$484,100) and the percentage ratios mentioned in rule 14.07 of the Listing Rules was
less than 5%, therefore, it falls below the de minimal threshold under Rule 14A.76 of
the Listing Rules and thus was not subject to any reporting, announcement or
independent shareholders’ approval requirements.
(b)
Non-recurring
(i)
During the year, management fee charged to the Group related mainly to the salaries
of the management team and the project team whose salaries were recorded under
Victrad during the transition period of the restructuring where Victrad became the
immediate and ultimate holding company of Strike Singapore. As at 30 June 2013, the
management team and the project teams have been fully transferred to Strike Singapore.
(ii)
In the year ended 30 June 2013, Strike Singapore had subcontracted some electrical
engineering works to Victrad as part of the Group’s internal restructuring. This
subcontracting service was subsequently terminated as the Group underwent the
Reorganisation to prepare for the Listing.
(iii) In the year ended 30 June 2013, Victrad raised billings to customers on behalf of Strike
Singapore for certain projects that were transferred from Victrad. As at 30 June 2013,
these projects had been completed.
(iv) Subsequent to the incorporation of the joint venture and associates, Strike Singapore
continued to engage the services of the 3 ex-employees who resigned and became
shareholders of these companies. Their services were engaged for projects which they
were involved in while in employment with Strike Singapore.
(v)
In some projects subcontracted to the joint venture and associates in a(i), Strike Singapore
provided services of the related project teams to the joint venture and associates. These
project teams had prior involvement in the projects before the projects were subcontracted.
Management fees were charged to the joint venture and associates for the services of
these project teams.
(vi) In the year ended 30 June 2013, Strike Singapore sold some raw materials to the joint
venture and associates. Such transactions took place as and when the need arose for
the joint venture and associates.
Kingbo Strike Limited Annual Report 2013/2014
69
Notes to Financial Statements
(Continued)
30 June 2014
27. RELATED PARTY TRANSACTIONS (Continued)
(I)
(Continued)
(b)
Non-recurring (Continued)
(vii) In the course of subcontracting of projects, costs incurred on behalf or costs billed by
customers for the relevant projects were recharged to the joint venture and associates
accordingly. Similarly, for projects which were transferred from Victrad, during the
transition period of the restructuring where Victrad became the immediate and ultimate
holding company of Strike Singapore, such costs were recharged to Strike Singapore.
(II) Outstanding balances with related parties
Details of the Group’s balances with the immediate and ultimate holding company, the joint venture
and associates are disclosed in notes 20 and 22 to the financial statements.
(III) Commitments with related parties
On 1 August 2013, Strike Singapore entered into two-year agreement with Victrad, the immediate
& ultimate holding company, for the lease of office premises. The amount of total rental expense
charged by Victrad for the year is included in note 27(1)(a)(iii) to the financial statements. The total
rental expenses payable to Victrad by the Group in the financial year ending 30 June 2015 and
2016 amount to S$114,000 and S$9,500, respectively. Victrad, being our controlling shareholder,
is a connected person of our Company. The rental expenses payable to Victrad was less than HK$3
million (approximately S$484,100) and the percentage ratios mentioned in rule 14.07 of the Listing
Rules was less than 5%, therefore, it falls below the de minimal threshold under Rule 14A.76 of
the Listing Rules and thus was not subject to any reporting, announcement or independent
shareholders’ approval requirements.
(IV) Compensation of key management personnel of the Group
Directors’ fees
Salaries and bonuses
CPF contributions
Related parties
Remuneration paid to close family members
of key management personnel
70
Kingbo Strike Limited Annual Report 2013/2014
2014
S$
2013
S$
37,917
762,375
63,221
—
587,175
44,759
863,513
631,934
48,488
46,429
Notes to Financial Statements
(Continued)
30 June 2014
28. OPERATING LEASE ARRANGEMENT
As a lessee:
The Group leases certain of its office properties under operating lease arrangement. Leases for properties
are negotiated for terms ranging from 1 to 2 years.
Future minimum rental payable under non-cancellable operating leases at the end of the year are as
follows:
Group
2014
S$
Amount payable within a year
Amount payable within 2 to 5 years
2013
S$
114,000
9,500
—
—
123,500
—
29. CONTINGENT LIABILITIES
At 30 June 2014, the contingent liabilities not provided for in the financial statements were as follows:
Group
2014
S$
Guarantees:
Security bonds to the Singapore Government in
relation to foreign workers
Share of a joint indemnity with an associate given to
customers in respect of foreign workers employed
by the associate for a project
2013
S$
(i)
495,000
550,000
(ii)
—
26,000
495,000
576,000
(i)
As required by the Singapore Government for each foreign worker hired, companies must submit a
security bond of S$5,000 to the Controller of Work Passes. During the year, the Group has hired
certain foreign workers and has arranged for an insurance company (the “Insurer”) to provide
insurance guarantees with the Singapore Government. The Directors believe that no foreign workers
of the Group have breached the relevant regulations during the year. Accordingly, the Group has
not provided for any provision in relation to such law. During the year, the guarantees provided by
the Insurer were S$550,000 and S$495,000 as at 30 June 2013 and 2014, respectively.
(ii)
The Group was required to provide a joint indemnity to the customer in respect of the customer’s
undertaking granted to the Singapore Government for the hiring of foreign workers by the associate
for a project. The Group has arranged for an insurance company to provide such indemnity to the
customer. Such amount was discharged as at 30 June 2014.
Kingbo Strike Limited Annual Report 2013/2014
71
Notes to Financial Statements
(Continued)
30 June 2014
30. FINANCIAL INSTRUMENTS
(i)
Financial instruments by category
The carrying amounts of each of the categories of financial instruments as at the end of the reporting
period are as follows:
Group
2014
S$
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities measured at
amortised cost
Trade and other payables
(excluding GST payable)
2013
S$
Company
2014
S$
2013
S$
3,995,644
18,252,010
4,029,689
7,249,375
—
7,377,356
—
—
22,247,654
11,279,064
7,377,356
—
6,614,880
14,647,241
29,453
511,587
(ii) Fair value and fair value hierarchy of financial instruments
Management has assessed that the fair values of cash and cash equivalents, trade and other
receivables, trade and other payables approximate to their carrying amounts largely due to the
short-term maturities of the instruments.
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and bank balances and short-term deposits. The
main purpose of these financial instruments is to manage funds for the Group’s operations. The Group
has various other financial assets and liabilities such as trade and other receivables and payables, which
arise directly from its operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in derivative
financial instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are foreign currency risk, liquidity risk and
credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised
below.
Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in
a currency other than the respective functional currencies of the Group entities, primarily Singapore Dollars.
The Group’s cash and cash equivalents at the end of the year have foreign exchange exposures.
72
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity to a reasonably possible change in the HK$ exchange
rates (against S$), with all other variables held constant, on the Group’s profit/(loss) for the year:
Group
2014
S$
368,868
(368,868)
HK$ — strengthened 5% (2013: 5%)
— weakened 5% (2013: 5%)
2013
S$
—
—
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to
shortage of funds.
The Group’s exposure to liquidity risk arises in the general funding of the Group’s operating activities.
The Group’s cash and cash equivalents and operating cash flows are actively managed to ensure adequate
working capital requirements and that repayment and funding needs are met.
The table below summarises the maturity profile of the Group’s financial liabilities at the end of the
reporting period based on the contractual undiscounted repayment obligations.
Group
30 June 2014
30 June 2013
S$
S$
Within
one year
One to
five years
Trade and other payables
(excluding GST repayable)
6,614,880
Total undiscounted financial
liabilities
6,614,880
Total
Within
one year
One to
five years
Total
—
6,614,880
14,647,241
—
14,647,241
—
6,614,880
14,647,241
—
14,647,241
Financial liabilities
Kingbo Strike Limited Annual Report 2013/2014
73
Notes to Financial Statements
(Continued)
30 June 2014
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Liquidity risk (Continued)
Company
30 June 2014
30 June 2013
S$
S$
Within
one year
One to
five years
Other payables
29,453
Total undiscounted financial
liabilities
29,453
Total
Within
one year
One to
five years
Total
—
29,453
511,587
—
511,587
—
29,453
511,587
—
511,587
Financial liabilities
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
default on its obligations. The Group’s main exposure to credit risk arises primarily from trade and other
receivables and cash and cash equivalents. The credit risk on such trade and other receivables is minimal
as the Group adopts the policy of dealing only with customers and counterparties of appropriate credit
history. For cash and cash equivalents, the Group minimises credit risk by placing the surplus funds with
reputable banks.
Exposure to credit risk
At the end of the reporting period, the Group’s maximum exposure to credit risk is represented by any
carrying amount of each class of financial assets recognised in the statement of financial position.
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the individual profile of its trade
receivables on an on-going basis. At the end of the reporting period, approximately 99% (2013: 100%)
of the Group’s trade receivables were due from the top 2 (2013: top 5) trade debtors.
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good
payment records with the Group. Cash and cash equivalents that are neither past due nor impaired are
placed with or entered into with reputable financial institutions or companies with high credit ratings and
no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in note 20 to the
financial statements.
Capital management
The primary objectives of the Group’s capital management are to ensure that it maintains a strong credit
rating and healthy capital ratios in order to support its business and maximise shareholders’ value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,
policies or processes for managing capital during the year.
74
Kingbo Strike Limited Annual Report 2013/2014
Notes to Financial Statements
(Continued)
30 June 2014
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Capital management (Continued)
The Group has no loans or borrowings as at the end of the reporting period. The Group seeks to maintain
a sustainable gearing ratio to meet its existing requirements. The Group will continue to apply prudent
financial policies which are to finance the operations mainly through cash generated from the operating
activities.
Group
2014
S$
2013
S$
Trade and other payables
Less: Cash and cash equivalents
6,730,804
(18,252,010)
14,717,534
(7,249,375)
Net (cash)/debt
(11,521,206)
7,468,159
19,200,311
3,786,835
7,679,105
11,254,994
Not applicable
66%
Equity attributable to owners of the Company
Capital and net debt
Gearing ratio
32. EVENTS AFTER THE REPORTING PERIOD
Subsequent to 30 June 2014, an associate, NEK, had called for an additional paid-up capital of S$50,000
in total divided into 50,000 shares at S$1.00 each from its shareholders in proportion to their existing
shareholdings. The Group’s subsidiary, Strike Singapore, having 50% shareholdings of NEK, subscribed for
25,000 shares in cash from the Company’s IPO proceeds, and the remaining was subscribed by the
remaining shareholder of NEK. Post subscription to the additional paid-up capital, Strike Singapore
continues to maintain a 50% stake in NEK and continues to account for NEK as an associate. The increase
in share capital was effective on 29 August 2014. The purpose of this new capital is to finance the
associate’s business operation.
Subsequent to 30 June 2014, a joint venture, YL, had called for an additional paid-up capital of S$250,000
in total divided into 250,000 shares at S$1.00 each from its shareholders in proportion to their existing
shareholdings. The Group’s subsidiary, Strike Singapore, having 50% shareholdings of YL, subscribed for
125,000 shares in cash from the Company’s IPO proceeds, and the remaining was subscribed by the
remaining shareholder of YL. Post subscription to the additional paid-up capital, Strike Singapore continues
to maintain a 50% stake in YL and continues to account for YL as a joint venture. The increase in share
capital was effective on 9 September 2014. The purpose of this new capital is to finance the joint venture’s
business operation.
33. COMPARATIVE AMOUNTS
Certain comparative amounts have been reclassified to conform to the current year’s presentation.
34. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the board of directors on 22 September
2014.
Kingbo Strike Limited Annual Report 2013/2014
75
Four Year Financial Summary
A summary of the results and of the assets and liabilities of the Group for the last four financial years, as
extracted from the published financial statements, is set out below:
2014
S$
REVENUE
Cost of sales
Year ended 30 June
2013
2012
S$
S$
2011
S$
22,628,298
(13,515,642)
18,660,508
(10,376,929)
15,609,071
(10,556,584)
32,522,617
(25,069,464)
Gross profit
Other operating income
Administrative expenses
Other operating expenses
Finance costs
Share of results of a joint venture
Share of results of associates
9,112,656
51,447
(2,771,721)
(292,496)
(2,568)
499,930
426,059
8,283,579
45,513
(1,273,041)
(87,832)
(620)
579,104
195,920
5,052,487
47,116
(878,315)
(98,862)
(82)
130,590
27,726
7,453,153
20,344
(832,477)
(97,248)
(132)
126,733
—
PROFIT BEFORE TAX
Income tax expense
7,023,307
(1,276,038)
7,742,623
(1,201,053)
4,280,660
(611,092)
6,670,373
(1,083,953)
5,747,269
6,541,570
3,669,568
5,586,420
PROFIT FOR THE YEAR AND
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Assets and liabilities:
2014
S$
76
As at 30 June
2013
S$
2012
S$
2011
S$
Total assets
Total liabilities
27,243,334
(8,043,023)
19,714,399
(15,927,564)
22,560,898
(17,161,633)
29,788,798
(22,623,101)
Total equity
19,200,311
3,786,835
5,399,265
7,165,697
Kingbo Strike Limited Annual Report 2013/2014